Mboweni announces R2 billion in personal tax relief
CAPE TOWN - Finance Minister Tito Mboweni said there would be no new income tax hikes this year because of the country’s weak economic outlook.
He’s announced R2 billion in relief for individual taxpayers – and further cuts in state spending amounting to R261 billion over the next three years.
This includes pruning the state’s wage bill by just over R160 billion over the same period.
Mboweni’s revealed the government expected to collect R63.3 billion less revenue than was projected in last year’s Budget, a significant shortfall that means the state will have to borrow more.
Relief for taxpayers will come through above-inflation increases in all tax brackets and will be welcome news, although excise duties on alcohol and tobacco go up along with a 25 cent a litre increase in fuel levies.
The R63.3 billion revenue shortfall is the result of stunted economic growth – around 0.3% last year and expected to come in at only 0.9% this year, lower than was forecast in the last Budget.
Government has to borrow more – and the deficit is expected to hit 6.3% of GDP this year.
The cost of debt interest payments currently gobbles up 15 cents of every rand the government collects. Debt-service costs are the fastest-growing area of state spending.
Wrestling public debt under control is one of Mboweni’s main missions.
Over the next three years, he’s cutting state spending by R261 billion, which includes pruning the public sector wage bill by R160.2 billion – something that could spark a political storm with unions. Even so, debt won’t be stabilised any time soon.
This article first appeared on EWN : Mboweni announces R2 billion in personal tax relief
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