Cape Town - The R28 billion needed by the National Treasury to fund a revenue shortfall is most likely going to be financed by an already constrained taxpayer, with low- and middle-income earners not expected to be spared.
Today, Finance Minister Pravin Gordhan will deliver the national Budget Speech in Parliament amid a myriad of demands, suggestions and expectations as he once again walks a fiscal tightrope strained by a sluggish economy.
While increases in the “sin taxes” on alcohol and cigarettes are inevitable, so too is a hike in personal income tax as well as the possible introduction of the sugar tax.
But whether Gordhan would scrap presidential jets, trim the fat in the cabinet and introduce lifestyle audits - as suggested by some - remained to be seen.
“The real challenge will be to reduce government expenditure,” said Janine Myburgh, the president of the Cape Chamber of Commerce and Industry.
“The public service has become too big and high salaries mean that the situation is unsustainable. The minister has recognised the problem but he has not always received the cooperation he needs.
“The massive losses incurred by most of the state-owned enterprises are a further challenge,” she said.
Myburgh said it was “very unlikely” that there would be positives for the poor and middle class.
She said: “Slow economic growth means that the minister has very little room to move and increases in grants will be limited. Middle-income earners could well face tax increases.”
“Personal income tax is widely
expected to be increased. Unfortunately, there is such a small pool of income
tax payers that the increases could be
painful. We would prefer to see this
burden more widely spread,” Myburgh added.
The Black Management Forum’s deputy president, Dumisani Mpafa, said they were not in favour of increased taxes.
“Our economy is already in a depressed state, as it is. But, if the minister absolutely has to, he must increase personal income tax and not VAT. He must tax the assets of the wealthy so that we know who holds all the wealth,” Mpafa said.
“This budget can’t be business as usual,” said Tony Ehrenreich, the provincial secretary of trade union federation Cosatu. “Because business as usual has brought our country to the brink of disaster. With growing levels of unemployment and inequality, and the apartheid structure of society still largely unchanged, we want to see the Budget build on the January 8 statement of the ANC, where resources are directed towards the government.
“We want to see a progressive taxation system that taxes the rich in this country more, because the top 5% of South Africans have as much wealth as the bottom 70%. We want to see corporate taxes increase to levels closer than those in the US, and the government to enforce collection through prison penalties,” said Ehrenreich. “So there is sufficient revenue to cover good social services.”
The DA’s spokesperson on finance, David Maynier, said: “Whether you are rich and taxed directly, or poor and taxed indirectly, the minister is going to reach into your pocket and help himself to R28 billion to plug the fiscal hole But there are alternatives to tax increases. We can boost economic growth. We can sell assets, cut spending and eliminate waste. That is why we are proposing a comprehensive spending review.
“That is the only way we will be able to reprioritise expenditure to provide opportunities for young people who do not have jobs.”