Taxpayers should brace themselves for tax increases this year, warns Ettiene Retief chairman of the national tax and South African Revenue Service (Sars) committee at the South African Institute of Professional Accountants (SAIPA), in a press statement on Monday.

This is to address the R51-billion revenue gap that the treasury needs to close, the result of a tax revenue collection shortfall.

During his maiden medium-term budget speech in October last year, Finance Minister Malusi Gigaba said that the country was facing an estimated R51-billion revenue deficit in the 2017/18 financial year.

This deficit is set to increase from R51-billion to R69-billion or even greater in the 2018/19 tax year, said Retief. Additional funds will be needed for free higher education for students from disadvantaged families, as announced by former president Jacob Zuma at the 54th ANC elective conference last year.

Retief said that the taxpayers should also expect to see adjustments to current taxable income brackets which will increase collections without the need to adjust the actual rates.

In last year’s budget, taxpayers saw a 1% increase in personal income in all taxable income brackets and a new personal income bracket of 45% for taxable incomes above R1.5-million per year.

Retief said there may not be any further top marginal rate in this years budget. An increase in the top marginal tax rate may result in increased efforts to evade tax by hiding income or shifting it to other tax jurisdictions”, he said. He added this was not the right time to introduce a wealth tax as there is already capital gains tax, estate duty, a donations tax and transfer duty when acquiring a property.

A lack of regulation and disclosure in cryptocurrencies like Bitcoin, Ethereum, Litecoin, Ripple, and IOTA could also be a used to evade taxes and circumvent exchange controls and therefore should be addressed, warned Retief.

Although Sars is yet to clarify its position on the tax treatment of cryptocurrency trading, the South African Reserve Bank (SARB) has launched a Financial Technology (FinTech) Programme to review SARB’s position on cryptocurrencies.

He said the much-debated sugar tax will be introduced at a lower rate as previously proposed and will yield lower revenue collections.

Recently government has been warning taxpayers on an increase in value added tax (VAT). Retief estimates that there will be a 1% point increase which could raise R20-billion.

“The poor may be offset by the inclusion of more zero-rated items or more targeted assistance for the poor”, said Retief responding on the impact of the VAT increase on low income earners.

He said that previously it was announced that the zero-rating in fuel will be scrapped but this was subject to consultation as it was unclear how tax it could generate given that businesses can claim back their VAT on fuel purchases.