Johannesburg - South Africa’s 2017/18 budget will have to be bold to pull the country out of the prevailing economic crisis. Economic growth has stalled and the threat of a credit rating downgrade still looms large. The Conversation Africa’s business and economy editor Sibonelo Radebe asked Jannie Rossouw to tease out critical issues that must be addressed in the upcoming budget.
What should South Africans expect from the 2017 budget speech?
The Minister of Finance made it clear in last year’s medium term budget that tax increases will be needed to ensure that government revenue rises by R28 billion for the 2017/18 tax year. As South Africa is currently suffering very low economic growth, this additional income can only be raised by higher taxes and through bracket creep as a result of inflation. Bracket creep happens when taxpayers’ income increases as a result of inflation, but concomitant tax relief isn’t granted. This pushes them into higher tax brackets.
South Africans should expect a few things on the tax front. They are unlikely to get tax relief to offset bracket creep, and they are likely to face increases on consumption products such as alcohol, tobacco, soft drinks and fuel. It’s also highly likely that the government will announce some form of sugar tax in this budget.
But all of this won’t be enough to fund the government’s income requirements. This leaves it with one of three options: an increase in Value Added Tax (VAT); an increase in company tax; or an increase in personal income tax.
Increases in company and personal tax seem more likely.
So there will be significant movement on the tax front?
There is widespread speculation that VAT might go up. But this will place a heavy extra burden on poor people and households. My first choice is for a smaller civil service which will lead to savings in expenditure, eliminating the need for tax increase.
Sibonelo Radebe.
Full story at Fin24.
No comments:
Post a Comment