Economist Dawie Roodt says that the state of government’s finances means that further tax increases can be expected in 2020.
Roodt noted in an interview with eNCA that the state’s debt is at record levels, meaning “there will be tax hikes”.
“The question is which one of the taxes will be increased? I am pretty sure that things like the fuel levy will be increased, and sin taxes.”
The economist said that the two taxes that can make a difference to the country’s finances are personal income tax, and value-added tax (VAT) and that February’s Budget will reveal all.
“I think personally personal income tax will be increased,” Roodt said.
Roodt said that a positive indicator going into the new year, is the strength of the rand, trading at around R14.00 against the dollar on Thursday (2 January).
A stronger rand, he said, is an indication that foreigners are interested in investing in South Africa, especially in financial markets.
He added that a stronger rand could also lead to interest rate cuts, which would benefit under pressure consumers.
Roodt’s comments align with Treasury’s revenue concerns which it outlined in its medium-term budget policy statement released at the end of October.
“Significant tax increases over the past several years leave only moderate scope to boost tax revenue at this time,” the Treasury said.
However, despite this limited scope, Treasury said that additional tax measures are under consideration to raise an extra R10 billion in fiscal 2021 – but did not provide any further details.
“Given the fiscal position we find ourselves in, all tax options need to be on the table,” said Chris Axelson, chief director for economic tax analysis in the Treasury.”