SA to miss tax target by over R300bn
To help the battered economy and fight the pandemic, South Africa has borrowed US$4.3 billion from the IMF, R5 billion from the AfDB and US$1 billion from the New Development Bank.
In February, the government left taxes unchanged due to "weakness in the economy" and opted to broaden the tax base, the Treasury said at the time. It has since said an additional R40 billion in taxes needs to be raised over the next four years.
"The reality is that there was a need in February to raise R40 billion more," said Kieswetter. "Right now, that need is significantly bigger than R40 billion because of the coronavirus."
While some restrictions have since been eased, many businesses have closed and the 30.1% unemployment rate is set to worsen, further weighing on tax collections. In a supplementary budget in June, the government cut its revenue projection for this fiscal year by more than R300 billion.
The revenue agency will work with the National Treasury and SA Reserve Bank on proposals for the main budget review to be presented by Finance Minister Tito Mboweni in February, Kieswetter said.
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Mboweni told clients of two of the country's biggest banks in June that there are no plans to boost income, corporate or value-added taxes (VAT), but the Treasury is discussing a possible inheritance tax and a so-called solidarity tax to raise additional funds. Taxes on the wealthy are favored politically.
South Africa's top income-tax rate is 45%, corporate tax is 28% and VAT is 15%. It has little room to raise levies with the ratio of tax revenue to GDP at 26%, compared with a global average of 15%, according to World Bank data.