SA to raise income, alcohol and tobacco taxes to help rein in deficit
Finance Minister Pravin Gordhan is likely to target income, alcohol and tobacco taxes in his February 22 budget to reassure rating agencies that he will gradually rein in the deficit in coming years, a Reuters poll found. The poll, taken in the past week, shows economists expect the government to target a budget deficit of 3.2% of GDP in the fiscal year from April 1. This is narrower than the 3.4% estimated for the fiscal year about to end. The treasury is then expected to narrow the budget deficit further to 2.8% of GDP in the 2018-19 fiscal year, and to 2.5% the following year. Most of the 15 economists surveyed expect the treasury to boost revenue with personal income tax hikes, as well as levies on purchases of often harmful goods, such as alcohol and tobacco products, to plug a R28bn ($2.15bn) shortfall in the new financial year. "The fiscal situation is a huge challenge for the South African government given increasingly difficult debt dynamics," wrote IHS Markit economist The...
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