The Budget speech for 2019 is almost upon us, and there’s an air of trepidation about what’s to come our way. Eskom can’t keep the lights on, SAA can’t stop burning through money, and the taxpayer can’t avoid hearing the bad news, it would seem.
Financial experts PwC have released a series of predictions for Tito Mboweni’s address on Wednesday. Kyle Mandy is the head of policy for their African division, and he’s already forecasting that there will be a huge tax revenue shortfall announced in Parliament:
“Tax revenue forecasts for 2018/19 were revised down by a significant R27 billion rand last time out. This revision was driven by collective SARS refunds of R20 billion, R11 billion of which cleared a backlog.”
“We feel this situation has deteriorated and we will see another tax revenue shortfall of R10 billion. This is down to the deteriorating collection of personal income tax, and the last quarter of corporate tax not meeting forecast targets.”
Budget speech 2019: Will South Africans be taxed more?
This time last year, South Africans were forced to address the 2017 tax “black hole” when a VAT increase was bestowed upon them. The rate went up from 14% to 15% during the 2018 Budget speech, and PwC conceded that this has somewhat helped the economy recover funds from elsewhere.
No change to the VAT rate can be made until 2021. But what about other collection streams? In what has basically become an annual tradition, Mandy and his team have already predicted that a fuel tax rise is on the cards. But, despite this and another glum tax revenue forecast, the fiscal analyst thinks tax hikes will be minor-to-moderate for the year ahead:
“We also think that the year after will see a tax revenue shortfall of R22 billion. That’s down to lower collections in the year before and the need for a more conservative buoyancy rate – 1.17 is simply too optimistic.”
“Will we see tax increases? We don’t feel there’s space for them across the board. It’s possible the treasury will target minor collection streams, but we feel that even generating something like R10bn would be a stretch in the current environment.”
It seems like PwC
The trade union says it wants a clear and concise strategy from Mboweni on how the government plans to increase the efficiency of our public transport system and road safety measures, as well as more clarity regarding the Giyani Water Project.