Tax predictions for the budget: raising revenue in a disruptive world
Muziwethu Mathema‚ senior economist at KPMG, offers this forecast on how the government will adjust taxes with the budget this year
Since 2009‚ National Treasury has embarked on fiscal expansion to enhance the public sector’s infrastructure programme and support future economic capacity. However‚ anaemic global economic growth over the past nine years has left the Treasury’s countercyclical expenditure programme unable to lift the GDP growth above 2% a year. Consequently‚ a combination of slow growth and lower tax buoyancy reduced the in-year 2016-17 revenue estimate by R23bn. Without policy adjustments‚ gross tax revenue will this financial year fall short of budget 2016 estimates by R36bn for 2017-18 and R52bn for 2018-19. These budget deficits are leaving SA’s sovereign rating on the brink of being downgraded to non-investment grade. To militate against this revenue shortfall‚ Finance Minister Pravin Gordhan announced in his 2016 medium-term budget policy statement that an additional R13bn for 2017-18 and an additional R43bn over the medium-term expenditure framework would have to be sourced through various t...
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