RICARDO SMITH: No more rabbits to pull out of the hat
South Africans are paying the price of the government endlessly kicking the fiscal can down the road
Finance minister Enoch Godongwana delivered his much-anticipated national budget on Wednesday after its unprecedented postponement from February 19. The bone of contention centred on disagreements between the members of the government of national unity (GNU) on a proposal to increase VAT by two percentage points to 17%.
In the revised budget the minister tabled a more moderate 50 basis-point increase this year and another next year, taking the VAT rate to 16% in the next fiscal year. However, some concessions include cutbacks in planned increases on social grants, as well as not providing any inflationary relief on income tax, which will result in bracket creep — and a loss in real wage growth and even nominal growth for some. ..
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