Africa-Press – South-Africa. Finance Minister Enoch Godongwana has warned that South Africa faces a significant revenue shortfall, with potential tax hikes on the cards.
In the Medium-Term Budget Policy Statement, Godongwana warned that South Africa’s revenue shortfall currently stands at a miss of nearly R57 billion for the current tax year and R54 billion in 2024/5.
With this in mind, the minister warned of tax hikes and a decrease in government spending in the upcoming 2024/25 financial year.
“The Treasury is confronted by the formidable challenge of raising tax revenues while keeping the electorate satisfied in an election year. Annually, the Budget Speech in February is a balancing act, but this year, in particular, will require an especially delicate touch,” experts from Sage said.
Sage named ten key aspects that it will be keeping an eye out for during the budget speech on Wednesday, 21 February:
No Pay As You Earn (PAYE) increases
The group said that South Africans are already contending with high inflation, increased energy and food costs, and high interest rates, which should stop government from increasing PAYE.
“Although the government may be reluctant to directly increase income tax, especially for low and middle-income earners, we can anticipate a minor tax bracket creep to cater for inflation,” Sage said.
National Health Insurance (NHI) Delay
There could also be a delay in the implementation of the NHI due to concerns over its funding.
This could be due to fears of introducing new payroll taxes and to prevent the potential cancellation of medical aid membership, which would further strain an already depleted public healthcare system.
Fuel levy increases
Over the last two years, the government has kept the fuel levy at the same level to help with higher petrol and diesel prices.
However, Sage expects there to be an increase in 2024/25 in line with inflation.
However, speaking in a pre-budget roundtable for the 2024 budget, Deloitte’s Billy Joubert said that it is unlikely that the fuel tax will be increased, as the government will not want to add further cost pressures on South Africans amid the cost of living crisis.
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