Gordhan expects lower tax revenue

2011-11-14 14:25

Finance Minister Pravin Gordhan said today he expected government to collect lower tax revenues this year due to the European debt crisis, which could pose a risk to global economic growth.

“As a result of the (euro debt) crisis, we are going to have reduced revenue this year. We will have to make decisions that ensures the sustainability of our fiscus,” Gordhan told business leaders following an annual general meeting of Business Unity SA.

According to National Treasury documents released last month, government expects to generate R814.2 billion this year and R890 billion next year.

But a myriad austerity measures being taken by European economies such as Greece and Italy could weaken the European economy, hitting the economic activity across the globe.

Gordhan also revealed that the government would release a policy document in the next 18 months, which will clarify rules for foreign investors wanting to invest in South Africa.

“The document will clearly identify what industries we consider strategic industries. Where there are national interest there will be clear, transparent and consistent rules which we would expect investors to understand before they come to South Africa,” he said.

In the wake of the R16.5-billion acquisition of local retailer Massmart by US retail giant Walmart, the government has been criticised for creating an impression that it did not want big foreign direct investments when it can least afford to do so.

Three government departments – namely Trade and Industry; Economic Development; and Agriculture, Forestry and Fisheries – are seeking to overturn the deal unless Walmart undertakes to procure a bulk of its merchandise from South Africa and to protect local jobs.

Earlier this year, the deal was approved by the Competition Commission. Gordhan refused to be drawn into the Walmart-Massmart matter as it was being handled by the courts.

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