ECONOMIC WEEK AHEAD: All eyes on Edward Kieswetter at Tax Indaba
The Tax Indaba will start on Monday followed by first-tier data releases
This week will kick off with the start of Tax Indaba on Monday, with keynote addresses from SA Revenue Service (Sars) commissioner Edward Kieswetter and deputy finance minister David Masondo.
The indaba, which was launched in 2011 and hosts about 1,800 delegates over five days, looks at topics such as international tax, corporate tax, indirect taxes and levies, investments and estates, payroll and employee-related compliance.
It is the first Tax Indaba for Kieswetter, who has the difficult task of cleaning up the revenue service and restoring confidence in taxpayers. He took up the job on May 1, succeeding Mark Kingon, a Sars veteran who took over in an acting capacity after President Cyril Ramaphosa suspended Tom Moyane in 2018.
Moyane was later fired in November, in line with recommendations from judge Robert Nugent, who headed a commission of inquiry into governance failures at the institution.
The failures were blamed for revenue shortfalls that led to a VAT increase in 2018, the first in more than two decades, which has put a strain on consumers.
The first-tier data releases are scheduled for later in the week. On Thursday, Stats SA will release the July producer price index (PPI) for final manufactured goods. The PPI for final manufactured goods has softened in recent months in tandem with the consumer price index amid a stronger rand and lower year-on-year fuel price increases. Economists polled by Bloomberg expect producer inflation to accelerate slightly to 6% from 5.8% in June.
Lower fuel prices will likely support a moderation in producer inflation in the coming months, while a weak domestic demand environment continues to constrain the pricing power of producers, NKC economist Elize Kruger said.
Friday will see the release of the July private sector credit data in the morning, followed by trade balance data later in the day.
Private sector credit has moderated somewhat in recent months, in June it increased to 6.9%, which is upbeat compared with credit uptake over the past three years.
“Rising credit appetite among households to sustain day-to-day expenditure and an increase in corporate credit to support working capital needs are among the main factors informing this expectation,” FNB chief economist Mamello Matikinca-Ngwenya said.
The trade balance is expected to have recorded its third consecutive surplus in July.
The balance of trade is an indicator of the difference in value between a country’s imports and exports. The current account reflects a country’s trade with the rest of the world. However, the figures are difficult to predict and economists stress that it is important to look at longer-term trends.
“The export performance is likely to have remained relatively weak on the deterioration in international trade flows that has, in particular, weighed on global manufacturing production, including in SA,” Investec economist Kamilla Kaplan said.
“On the import side, the gradual moderation in the rand denominated oil price since April should temper import growth,” she said.