Economists say Finance Minister Tito Mboweni is unlikely to increase taxes in order to finance the country’s vaccine rollout program. Their comments come as Mboweni is expected to table the 2021 Budget on Wednesday afternoon.
Experts say the Minister should rather focus on keeping spending low in order to make fiscal room to fund an effective vaccination programme. Economists say he should lean more on the private sector for support.
Minister Mboweni unlikely to introduce tax increase:
Economists say Mboweni will be faced with the challenging task of keeping a tight lid on spending in order to fund a R20 billion vaccine rollout programme.
Analysts say spending towards a vaccination program is far more important than spending on a public service wages bill and fruitless and wasteful expenditure.
Expectations ahead of the speech: Dr. Nthabiseng Moleko:
Chief Economist at Investec Annabel Bishop says the government may not even need to borrow to fund its vaccination programme.
“South Africans may see a small revenue, overrun estimate when we see the budget announced and this is a consequence of the fact that government might look for a slightly lower level of collection for 2021. Obviously, the final figures are not in yet. So, it will only come through at the end of March, but already there is an indication that we might see possibly up to a R100 billion. Of course, this will then cover the vaccine rollout programme that South Africa has already started,” says Bishop.
Director for Global Business Tax Services at Deloitte, Alex Gwala says any tax hikes at this stage would hurt the consumer.
“If the government wants to have a significant impact on tax revenue they will have to touch either on personal income tax, corporate tax or VAT as those account for about 80% of tax revenue. So, we don’t honestly expect that those can be touched at this stage. Simply because something that government is already aware of (is) the fact that the increase in tax no longer really results in a positive impact on our GDP point of view,” says Gwala.
Budget Speech 2021 | Previewing the speech with Busi Sibeko:
Source: SABC News (sabcnews.com)