Latest news with #R800bn
IOL News
21-05-2025
- Business
- IOL News
Godongwana gears up to table revised national budget
Finance Minister Enoch Godongwana will present the National Budget in Parliament on Wednesday afternoon for the third time this year, after two earlier versions were rejected over proposed VAT increases. Image: Parliament RSA Finance Minister Enoch Godongwana will, for the third time this year, present the National Budget in Parliament on Wednesday afternoon after two earlier attempts were rejected due to proposed VAT increases. Markets are hopeful the fiscal framework will now pass, and the rand is expected to gain ground against the dollar briefly breaking R18 to the greenback barrier on Tuesday, following a similar move last Friday. The previous two budget proposals failed to gain approval, and markets had been concerned over DA threats to leave the multi-party government. Since then, Cabinet has approved the proposed framework. The February budget, which suggested raising VAT from 15% to 17%, was rejected amid widespread opposition from political parties in what was a first in South Africa's democratic history. A March revision proposed a smaller VAT increase of 0.5 percentage points. This second attempt was clouded by uncertainty over whether the VAT hike had been approved and was legally challenged by the DA and EFF. Just days before a court ruling was due – set for a day before the VAT increase would take effect – Godongwana reversed course and withdrew the VAT hike proposal, a decision later upheld by the court. While scrapping the VAT increase offers some relief to consumers, it forces Godongwana to revisit government's income sheet. The government now faces a R75 billion revenue shortfall due to the absence of the VAT hike. Investec chief economist Annabel Bishop expects 'moderate' sin tax increases, including likely fuel levy hikes, to help bridge the gap. 'The take from excise duties (sin taxes) is estimated at an additional R1bn in March and may be slightly higher,' she said. In a recent note, Bishop said significant income tax hikes are unlikely, meaning National Treasury will need to reduce spending. She also noted corporate tax increases are unlikely due to their negative impact on growth and jobs. Old Mutual chief economist Johann Els agrees that spending cuts are inevitable but warns this could affect essential services like nursing and education. At the same time, Bishop pointed out that National Treasury has acknowledged the need to strengthen tax collection by the South African Revenue Service, increasing its funding. She noted that SARS is owed about R800bn in unpaid taxes, while the budget deficit funding gap was estimated at R375bn for 2024/25 in the March budget. IOL
IOL News
15-05-2025
- Business
- IOL News
What to expect from the upcoming national budget: Investec's insights on sin taxes
South Africans wanting to indulge in a night out that includes a few drinks or perhaps a pack of cigs, will have to dig deeper thanks to increases in sin tax. Image: Freepik With less than a week to go before the next iteration of the National Budget, Investec doesn't anticipate major personal tax increases, although cigarettes and booze are, again, likely to cost more. Finance Minister Enoch Godongwana will, for the third time this year, present government's fiscal framework in Parliament after two previous versions were rejected because of proposed VAT hikes. The National Budget will be tabled on May 21. The February National Budget proposed taking VAT from 15% to 17%, while a March document instead aimed to increase this tax by 0.5 percentage points. The second attempt to pass the document, which was mired in confusion as it was not clear whether the VAT hike had been approved, was challenged in court by the DA and EFF. Days before a judgment was set to be handed down – which would have been a day before the proposed VAT hike came into effect – Godongwana reversed track and said that he would drop the intended VAT increase. While this gives consumers some relief, it also means Godongwana had to go back to the drawing board. The government will need to find R75 billion to cover the revenue shortfall that it now anticipates because VAT won't be increased. Investec chief economist, Annabel Bishop, said in a note on Thursday that significant income tax hikes are not likely to be passed, which will require National Treasury to cut expenditure. She added that the country is also unlikely to see corporate tax increases, 'given the detrimental impact on growth and employment'. On Tuesday, Statistics South Africa said that the unemployment rate was now 32.9%, up from the last three months of 2024 when it was 31.9%. Including discouraged job seekers, a more accurate measure of the job situation, the rate went from 41.9% to 43.1% over the same quarter-on-quarter analysis, Statistics South Africa said on Tuesday. Old Mutual chief economist Johann Els has indicated that government will also have no choice but to cut spending, while expressing concern that this may affect frontline services such as nursing and teachers. However, Bishop does anticipate 'moderate' sin tax increases. 'An increase in the fuel tax levy is likely to be used to cover part of the funding gap,' she said. 'The take from excise duties (sin taxes) is estimated at an additional R1bn in March and may be slightly higher.' National Treasury has also recognised the need to bolster tax collections at the South African Revenue Service and has increased the institution's funding,' Bishop said. She added that the tax man is owed some R800bn in unpaid taxes, while the funding gap for the budget deficit was estimated at R375bn for 2024/25 in the March budget. Investec is predicting economic growth of 1.3% this year, a less optimistic than Moody's recent forecast of 1.5%. IOL
TimesLIVE
23-04-2025
- Business
- TimesLIVE
‘Introduce apartheid tax instead of a VAT hike': EFF
Finance minister Enoch Godongwana has emphasised the VAT increase is necessary to fund essential services in health, education, transport and security. According to court papers filed by Godongwana, the VAT hike was the only sustainable revenue proposal for the fiscus, with no room for further borrowing or detrimental spending cuts. Maotwe believes the government should instead target the rich. She suggested implementing a wealth tax, targeting trusts and luxury properties that are not being taxed. 'We are telling him he doesn't need to increase VAT. He needs to tax the rich. Introduce a wealth tax. There are many trusts that hold luxury properties which are not being taxed, but they use the portfolios to apply for loans at the banks.' Maotwe is also pushing for an increase of the corporate tax rate from 27% to 29%. She argued companies are making profits. 'It's not true the companies are not making money. They are making money. The issue is illicit financial flaws, underreporting of profit and other factors. We haven't given more money to the SA Revenue Service (Sars). The service should be able to collect that money. Sars said there is R800bn that is outstanding to collect. Even if Sars were to get only 10% of that, it would help the minister's problems. The issue is not that there are no other avenues. The problem is that the minister is scared to touch the rich.'
Zawya
25-02-2025
- Business
- Zawya
South Africa: SACP rejects proposed VAT hike, urges tax system overhaul
The South African Communist Party (SACP) has fully backed SARS commissioner Edward Kieswetter's proposal for National Treasury to invest in SARS to recover an estimated R800bn in uncollected revenue, rather than raising taxes. Their support was confirmed at the party's Political Bureau meeting over the weekend, amid public outrage over proposed tax hikes, including a significant VAT increase, which contributed to the unprecedented delay of the Budget Speech. The party said alternatives to a VAT increase should include stricter capital regulation, tackling illicit financial flows, and addressing tax avoidance by multinationals and offshore-listed firms. Progressive taxes, such as a capital transactions tax and wealth tax, should be implemented. Proposed tax reform solutions Kieswetter recently highlighted that the 2018 VAT increase did not significantly boost revenue, suggesting that enhancing SARS's capacity would improve tax compliance and broaden the tax base. He noted that the uncollected taxes include approximately R450bn identified through theoretical modeling and over R300bn from outstanding tax returns. In a statement, the SACP noted that corporate income tax rates have been drastically slashed since 1994, leading to a sharp decline in their contribution to national tax revenue, far outweighed by the disproportionate contributions of VAT and personal income tax. "As part of a comprehensive fiscal overhaul, the most recent 1% reduction in corporate income tax should be reversed to restore much-needed resources to the national fiscus," it said. To this end, a KPMG report shows that South Africa's corporate income tax (CIT) rate has decreased from approximately 50% in the early 1990s to 27% in 2022. The most recent reduction, from 28% to 27% in 2022, was implemented to enhance the country's competitiveness and attract investment. Call for corporate tax reversal Due to the proposed VAT increase, the SACP Political Bureau has called for an urgent consultative process within the Alliance and tasked the Party's Secretariat with taking immediate leadership in implementing this initiative. (The Party had already rejected the budget on Monday, 17 February 2025 – two days before its scheduled presentation.) "The SACP categorically opposes the adoption of regressive taxation measures, such as a VAT hike, and the defunding of key pro-poor programmes. A VAT increase, much like cutting funding for essential social services, will only serve to further impoverish the working class and marginalised communities, while shielding the rich and their wealth. This is not merely unfair – it is a direct attack on social equity and justice," it said. The SACP reiterated its demand for a national budget that prioritises the implementation of the National Health Insurance (NHI) and facilitates a transition to a universal basic income grant for all South Africans. Furthermore, the SACP urges the government to urgently recapitalise and revitalise state-owned enterprises, reversing the harm caused by neoliberal policies. "We call for reversing the damage to governance and management due to state capture, and stress that the delayed funding of these enterprises should not be viewed as 'bailouts'," it said. All rights reserved. © 2022. Provided by SyndiGate Media Inc. (
