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No tax increases: A 'good news' Budget but SA not out of the woods

24 February 2021 7:17 PM
Tags:
SA Economy
SARS
Tito Mboweni
The Money Show
Bruce Whitfield
Tax
Busa
sin taxes
income tax
tax revenue
Edward Kieswetter
Busi Mavuso
Isaah Mhlanga
COVID-19
excise duties
Budget 2021
corporate tax

'We owe a lot of people a lot of money' says Tito Mboweni. Wide-ranging reaction to Budget 2021 on The Money Show.

Compared to October last year we are in a much better situation, but our assessment from the Supplementary Budget time in June still stands: Our public finances are dangerously over-stretched.

Tito Mboweni, Minister of Finance

Gross loan debt will increase from R3.95 trillion in the current fiscal year, to R5.2 trillion in 2023/24. We owe a lot of people a lot of money.

Tito Mboweni, Minister of Finance

Finance Minister Tito Mboweni presented the 2021 Budget amid "a modest improvement in our fiscal position" and the rollout of South Africa's Covid-19 vaccination programme.

There was good news for tax payers after speculation that tax increases or new taxes would be necessary to fund the vaccination drive.

Mboweni said that government will not be going this route.

A slight adjustment of tax brackets means more money in the pocket of the average South African.

Corporate tax will actually be reduced - from 28% to 27%.

The tax man's revenue windfall in the latter part of 2020 has lowered the projected shortfall from R312 billion to R213 billion.

The increase in indirect taxes will result in an 8% hike for excise duties on alcohol and tobacco products.

Sars Commissioner Edward Kieswetter says the cut in the corporate tax rate is an important signal.

It's not a once-off cut. The minister you will recall said that he wants our tax rates to approximate the general levels of OECD [Organisation for Economic Co-operation and Development] rates, which is in the lower 20s. We are currently at 28%.

Edward Kieswetter, Commissioner - Sars

This is a down payment signal to a journey that the minister has consistently repeated.

Edward Kieswetter, Commissioner - Sars

Bruce Whitfield also got reaction from Busi Mavuso (CEO, Busa) and Isaah Mhlanga (Chief Economist, Alexander Forbes).

Definitely some surprising positives on the tax side - the reduction of corporate tax, no hike in personal income tax (especially against the backdrop of the latest unemployment stats), the fact that government is not going to be imposing any additional taxes to support economic recovery and Covid-19 expenses.

Busi Mavuso, CEO - Business Unity South Africa

There are concerns as well - the tax shortfall of R213 billion which is the largest that we have on record, the 12% budget deficit in this tax year of 2021, the projected declining revenues as a percentage of GDP growth. They all point to the need for the country to implement structural reforms.

Busi Mavuso, CEO - Business Unity South Africa

The debt burden is much better than what was tabled in October last year... by about 5% of GDP or R250 billion equivalent.

Isaah Mhlanga, Chief Economist - Alexander Forbes

Also, if you just consider this over-run in tax revenues... it's enabling for Treasury... In terms of government spending it's no longer the deep negative that we had last year, but still there's a contraction. And the fiscal deficit is much smaller compared to what we had, which means it's a good budget for board markets and a good budget for equity markets.

Isaah Mhlanga, Chief Economist - Alexander Forbes

Listen to the discussion in detail below:




24 February 2021 7:17 PM
Tags:
SA Economy
SARS
Tito Mboweni
The Money Show
Bruce Whitfield
Tax
Busa
sin taxes
income tax
tax revenue
Edward Kieswetter
Busi Mavuso
Isaah Mhlanga
COVID-19
excise duties
Budget 2021
corporate tax

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