Economists hopeful for tax relief for struggling consumers
Economists hope the budget will provide tax relief for cash-strapped consumers. They say while Finance Minister Tito Mboweni doesn’t have room to increase taxes he should consider giving temporary tax relief to struggling citizens who have taken salary cuts due to the impact of the coronavirus pandemic.
Tax partner at Webber Wenzel, Joon Chong says there should also be a decrease in corporate income taxes.
“We sincerely hope that the minister of finance will provide much-needed relief suffering from the devastating impact of lockdowns, we do not anticipate an increase in personal income tax. We hope to see fiscal drag relief adjustments into the brackets to allow for annual increases and inflation. Corporate income taxes should be decreased in the medium term and we hope to see more clarity on how this will be done in the restructuring of the corporate income tax regime.”
Mboweni tables the national budget on Wednesday afternoon. His budget is overshadowed by a weak economy, an escalating debt to GDP ratio and a shockingly high unemployment rate in the wake of a COVID-19 pandemic.
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Cosatu hopes Mboweni will give more focus to COVID-19 challenges
The Congress of South African Trade Unions’ (Cosatu) Parliamentary coordinator, Matthew Parks, says COVID-19 must first be addressed.
“Our number one priority is combatting the virus. So they need to roll-out the vaccine much quicker. We really want to see the budget being linked to the President’s (Cyril Ramaphosa) State-of-the-Nation-Address. To provide economic and social relief for workers and companies under lockdown or distress.”
“To stimulate economic growth, to rolling-out the infrastructure at our ports and rails and energy, which can spur economic growth. Government also needs to tackle the huge levels of money that we lose to corruption. So we can spend government money more efficiently and reach the targets that we set,” says Parks.
Hiking tax or not?
Tax Experts are divided on whether tax increases will be a good or bad idea this week when Mboweni tables his 2020/21 national budget. Industry experts believe there will be some new tax surprises but some experts think wealth tax will see major changes.
Funding for the COVID-19 vaccine rollout will probably have to come from increasing taxes from various other places or as an alternative.
The tax environment in South Africa amid the COVID-19 pandemic:
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Mboweni’s 2020/21 budget will be the toughest he has ever presented to Parliament. His budget is overshadowed by a weak economy, an escalating debt to GDP ratio, a high unemployment rate and the COVID-19 pandemic.
The country’s economic outlook has deteriorated dismally, impacting revenue collection.
Source: SABC News (sabcnews.com)
