SA to take tax hit in February budget
South Africa will be hit by a R15 billion tax hike in February as Treasury scrambles to deal with government overspending and rocketing borrowing costs.
On Wednesday, the Medium-Term Budget Policy Statement was released, which makes provision for R15 billion in "tax measures" to increase government revenue next year. This is part of a crisis plan to tackle a fiscal blowout, with government debt now expected to reach almost 80% of GDP in the next two years.
Treasury officials did not want to comment on which tax or taxes could be affected, but stressed to News24 that government spending cuts will be prioritised – while taxpayers will face the "lowest burden".
Tax income is already under strain amid a weak economy due to load shedding, Transnet woes, high inflation and rocketing interest rates.
The R15 billion tax announcement was unexpected, said Elna Moolman, head of SA macroeconomic, fixed income and currency research at Standard Bank.
"I expected that Treasury would continue with their line that they won't increase taxes because the economy is too weak – but at the same time, R15 billion isn’t really big enough to have a big enough impact anywhere."
Moolman expects that the R15 billion will be earned from not adjusting personal income tax brackets for inflation, so-called fiscal drag or bracket creep.-Fin24
On Wednesday, the Medium-Term Budget Policy Statement was released, which makes provision for R15 billion in "tax measures" to increase government revenue next year. This is part of a crisis plan to tackle a fiscal blowout, with government debt now expected to reach almost 80% of GDP in the next two years.
Treasury officials did not want to comment on which tax or taxes could be affected, but stressed to News24 that government spending cuts will be prioritised – while taxpayers will face the "lowest burden".
Tax income is already under strain amid a weak economy due to load shedding, Transnet woes, high inflation and rocketing interest rates.
The R15 billion tax announcement was unexpected, said Elna Moolman, head of SA macroeconomic, fixed income and currency research at Standard Bank.
"I expected that Treasury would continue with their line that they won't increase taxes because the economy is too weak – but at the same time, R15 billion isn’t really big enough to have a big enough impact anywhere."
Moolman expects that the R15 billion will be earned from not adjusting personal income tax brackets for inflation, so-called fiscal drag or bracket creep.-Fin24
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