{"id":56162,"date":"2023-11-07T17:28:39","date_gmt":"2023-11-07T17:28:39","guid":{"rendered":"https:\/\/www.africa-press.net\/south-africa\/all-news\/more-taxes-on-the-cards-for-south-africa"},"modified":"2023-11-07T17:28:39","modified_gmt":"2023-11-07T17:28:39","slug":"more-taxes-on-the-cards-for-south-africa","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/south-africa\/all-news\/more-taxes-on-the-cards-for-south-africa","title":{"rendered":"More taxes on the cards for South Africa"},"content":{"rendered":"

Africa-Press – South-Africa. <\/strong><\/span>The Parliamentary Budget Office (PBO) says that National Treasury is shooting itself in the foot by trying to solve South Africa\u2019s budget problems by cutting spending \u2013 and that the government needs to reform the entire structure of the economy to address unemployment, inequality and poverty.<\/p>\n

The office, which is a support structure for the finance and appropriation committees in both houses of Parliament, made submissions on the medium-term budget review presented by finance minister Enoch Godongwana last week.<\/p>\n

The group acknowledged the pressure on government revenues, but argued that South Africa \u2013 as one of the most unequal countries in the world \u2013 has room to draw more tax revenue from its \u201crelatively broad tax base\u201d.<\/p>\n

\u201cTax remains an important tool for the redistribution of income and wealth, more so when there is extreme structural inequality,\u201d it said.<\/p>\n

\u201cThe tax base reflects extreme levels of unemployment, poverty and inequality and failure to structurally transform the economy. The government should use the fiscal policy to transform the structure of the economy.\u201d<\/p>\n

Revenue collections are projected to be R56.8 billion lower than projected in the 2023 Budget due to faster-than-expected fallen commodity prices and rising value\u2010added tax (VAT) refund claims.<\/p>\n

Lower tax revenue and higher expenditure have contributed to a higher budget deficit and slightly more government debt, contrary to the projections of the NT in the 2023 Budget Review.<\/p>\n

The budget office said there are several potential areas for more tax to be collected, including:<\/p>\n

National Treasury already outlined its intentions to raise an additional R15 billion in taxes in 2024 \u2013 details of which will be contained in the 2024 budget.<\/p>\n

While wealth taxes have been floated repeatedly by outside parties, Treasury itself has not indicated that this is the route it will be going.<\/p>\n

Economists anticipate that the R15 billion will be raised by not adjusting tax brackets for inflation.<\/p>\n

Self-defeating<\/p>\n

The budget office took a generally negative view of the MTBPS, noting that it lacked credibility, given the government\u2019s track record with implementing promised reforms and failure to meet most of the targets set out by the National Development Programme that governs policy.<\/p>\n

More broadly, it argued that the Treasury\u2019s goal of pursuing a budget surplus in the current economic environment \u2013 through budget cuts and more debt \u2013 will likely do more harm than good in the long term.<\/p>\n

\u201cExtraordinarily high levels of structural unemployment, poverty and inequality, market concentration, financialisation, misallocation of capital, and inadequate state capacity to deliver infrastructure projects all point toward continued poor investment and economic growth performance,\u201d it said.<\/p>\n

\u201cThe credibility of the fiscal policy framework will remain in question unless the government acknowledges the urgent problems facing the economy \u2013 and that electricity availability is but one of these urgent problems.\u201d<\/p>\n

The PBO criticised Treasury\u2019s austere approach to the budget \u2013 \u201cstaying the course\u201d, as it said \u2013 noting that it has not provided any evidence to show that this route would deliver the promised outcomes.<\/p>\n

On the contrary, the government\u2019s failure to reach its NDP targets and its consistent failure to reduce deficit and debt levels of the past decade prove that its consolidation approach has not worked.<\/p>\n

\u201cThe choice of fiscal policy framework over the past decade has failed to support a developmental role for the state, economic and industrial transformation and reducing inequality through redistribution of income and improving living conditions,\u201d it said.<\/p>\n

The budget office acknowledged the role of load shedding in the ongoing financial crisis, but said that fiscal consolidation is likely to make things worse.<\/p>\n

Citing international research, the group said that this strategy leads to permanent reductions in GDP and higher debt levels \u2013 even in countries that don\u2019t have load shedding to deal with.<\/p>\n

If GDP is permanently reduced and debt pushed higher, the country would be forced into a loop of trying to pay off debt with less means to do so. Effectively, the Treasury\u2019s economic plan is self-defeating and contradictory.<\/p>\n

Instead, the office argued that the government should move to further protect social spending and tackling poverty, unemployment and inequality.<\/p>\n

\u201cThere are huge costs associated with the very high levels of UPI and insufficient resilience to domestic social and political instability, climate change events, the lasting effects of Covid-19 and possible future pandemics, geopolitical conflicts, as well as economic and financial instability,\u201d it said.<\/p>\n

\u201cThese risks not only undermine the credibility of the fiscal framework but also threaten democratic institutions.\u201d<\/p>\n

For More News And Analysis About South-Africa<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – South-Africa. The Parliamentary Budget Office (PBO) says that National Treasury is shooting itself in the foot by trying to solve South Africa\u2019s budget problems by cutting spending \u2013 and that the government needs to reform the entire structure of the economy to address unemployment, inequality and poverty. The office, which is a support […]<\/p>\n","protected":false},"author":84,"featured_media":56160,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5],"tags":[274,315,275],"class_list":["post-56162","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","tag-africa-press","tag-africa-press-south-africa","tag-south-africa-2"],"yoast_head":"\nMore taxes on the cards for South Africa - South Africa<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/south-africa\/all-news\/more-taxes-on-the-cards-for-south-africa\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"More taxes on the cards for South Africa\" \/>\n<meta property=\"og:description\" content=\"Africa-Press – South-Africa. 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