BUDGET 2017
Commodity price rally may help ease pressure of revenue shortfall
Income tax hike would weigh more heavily on middle-income earners, says Standard Bank
A recovery in commodity prices and a possible expansion of the economy by 1.4% in 2017 may give the Treasury room to manoeuvre and buy more time before a hike in value-added tax (VAT) is required, according to a Standard Bank report published on Monday. An increase in the VAT rate from 14% is widely considered to be a last resort to boost much-needed government revenue and may not feature when Finance Minister Pravin Gordhan delivers the 2017 budget in Parliament on Wednesday. But the Davis Tax Committee has said a hike of one percentage point in VAT could collect between R15bn and R20bn in additional funds. Anaemic economic growth in 2016 has resulted in a revenue shortfall and Gordhan is expected to raise taxes across the board in the new year. Siphamandla Mkhwanazi, Standard Bank economist and author of the report, said, "Given low economic growth, the finance minister will face tough choices." In the medium-term budget statement in October, Gordhan said tax increases were necess...
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