Group Chief Economist at Standard Bank, Goolam Ballim says consolidating the slow growth of South Africa's economy may prove to be difficult and that a shortfall in revenue is likely to exceed R 50 billion.
Finance Minister Malusi Gigaba is expected to deliver the 2018 Budget on Wednesday, with the prospects of higher taxes and a possible higher value-added tax (VAT) to help plug the shortfall.
Chairman of the national tax and South African Revenue Service (SARS) committee at the South African Institute of Professional Accountants (SAIPA) Ettiene Retief explains why a broad range of taxes is needed to make up the shortfall.
A 1% increase in VAT can probably cover about R 22 billion and there could be directed relief that could actually be provided for people in terms of things like basic food stuff. Lets not forget that there is also the zero rating of fuel, that also could have a further impact.— Ettiene Retief, Chairman of the national tax and SARS committee at SAIPA
Ballim says there may be some relief over the year.
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Meanwhile the Congress of South African Trade Unions (COSATU) says workers will be hard hit by VAT increase.
Cosatu spokesperson, Sizwe Pamla says the criteria for high income earners should be reviewed and that the finance ministry must look at corporate tax.
It will be a big deal, workers just cannot afford it. The price of living is very high. We think we need to explore corporate tax for example because no one seems interested in talking about that.— Sizwe Pamla,Cosatu spokesperson
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A broad cross-section of South African civil society groups have drafted an alternative 'Human Rights Budget', detailing it's proposed solutions around debt and social spending.
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