Africa-Press – South-Africa. The National Treasury desperately needs to raise revenues and may end the solar tax rebate soon.
The weaker-than-expected GDP will likely increase the budget deficit further than the National Treasury’s initial 2023 forecasts.
“For 2023/24, we expect a shortfall in taxes of around R47 billion accompanied by higher expenditure of R56 billion, pushing the deficit to 5.5% of GDP. The outcome is markedly higher than the National Treasury’s target of 4%,” economists at Nedbank said.
“The commodity price upcycle, which led to a windfall in tax revenues last year, has turned sharply, significantly reducing corporate tax collections.”
Despite lessening intensity over the last few days, load shedding has also hurt growth.
Total revenue for the five months that ended August dropped by 0.7 y/y, with corporate taxes declining by 13.7%.
Although personal income taxes (8%) and value-added tax (VAT) (5%) increased, it was at a slower pace compared to the same period last year.
With this in mind, Nedbank said that revenue will only grow by 1%, far lower than the 3.5% pencilled in the 2023 budget.
For the Medium-Term Expenditure Framework (MTEF) period, revenue is expected to be R156 billion lower than the Budget 2023 projections.
That said, South Africans should not expect anything major from next week’s Medium Term Budget Policy Statement (MTBPS).
“No major revenue measures will be announced in the MTBPS, and budget developments over the remainder of FY2023/24 will determine whether we can expect tax changes in the February 2024 budget statement,” Nedbank said.
For More News And Analysis About South-Africa Follow Africa-Press
