CAPE TOWN- South Africa may have a new finance minister soon following the replacement of its president, but whoever replaces Malusi Gigaba will still face a R50.8 billion hole in the nation’s finances.
Tax collections have dwindled and that has intensified the difficulty faced by Gigaba at the National Treasury in striking the balance between finding more revenue and not choking off the country’s fragile recovery.
In October, his officials made an estimation that public debt will exceed 60% of gross domestic products by 2022. The government pledged to cut spending by a further R25-billion over the next three years to avert another downgrade of its rand debt to junk, the next month.
Since that has happened, Moody’s Investors Service has warned that it might deliver just such a ratings cut, and uncosted pledge by former President Jacob Zuma for free higher education for poor students added R12.7 billion to the country’s financial needs.
These are the five biggest potential revenue-generating tax changes the minister may announce at the February 21 budget:
1. Value-added tax, South Africa could collect as much as R22-billion if it raises the rate of VAT.
2. Medical-insurance tax credits
3. Sugar tax which may add as much as R11-billion to government coffers
4. Raising the top income-tax rate
5. Other options include raising taxes in alcohol and tobacco products which may add as much as R5-billion.
Photo Credit- Jacaranda FM