Budget 2021

South Africans may be hit with extra taxes next year - Treasury

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Treasury warned that while South Africans have been hit with large tax hikes over recent years, even more taxes are being considered to boost the bare state coffers.

“Significant tax increases over the past several years leave only moderate scope to boost tax revenue at this time. Given the size of the required adjustment, however, additional tax measures are under consideration,” Treasury said in its Medium-Term Budget Policy Statement, tabled by Minister of Finance Tito Mboweni in Parliament on Wednesday. 

Mboweni painted a grim picture of SA’s government finances, forecasting that government debt – fuelled by a massive civil servant wage bill (which now represents 46% of total tax revenue) and struggling state-owned enterprises, particularly Eskom – will reach more than 71% of GDP by 2022. The national debt currently tops R3trn.

New taxes and tax hikes over recent years – including an increase in VAT last year, the introduction of a tax on sugary drinks and a carbon fuel levy on petrol and diesel – have not earned the expected revenue. This year, for the first time since the early 1990s, government didn’t adjust income tax for inflation, which took another bite out of South African salaries.

But the weak economy hit the tax income from corporates and households, with tax collection now expected to be R53bn below the budgeted amount for the year.

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