S.Africa Faces Tax Hikes
October 24, 2014 Taxation in South Africa
CAPE TOWN – South Africa will soon have to enact a selection of tax hikes and spending cuts in order to meet its own tax revenue targets.
While delivering the medium term budget policy statement on October 23rd the Finance Minister of South Africa Nhalanhla Nene indicated that over the next three years the government may be forced to hike taxes.
Unless the government can significantly reduce expenditures and boost tax revenues immediately, the total government debt of the government of South Africa could reach SAR 2.4 trillion by the end of the 2017 financial year.
During the medium term budget policy statement the Finance Minister announced that the level of economic growth in South Africa is expected to fall this year from a level of 2.7 percent to as little as 1.4 percent, and tax revenues are likely to take a corresponding toll.
The Minister indicated that the government needs to raise at least SAR 27 billion in extra tax revenues over the next two years, either through tax hikes or spending cuts.
Some taxation experts have already come forward to suggest that the most likely tax change to be implemented is a hike to the rate of VAT, while some also suggested that a hike to marginal tax rates, both for high income earners and low income earners, is also inevitable.
Photo By: Kyknoord