By John Fraser
Tiito one; pundits nil.
Those who were sure we would see a VAT hike in the 2020 budget have been proven wrong.
Finance Minister Tito Mboweni says that extra taxes were looked at, but instead it was decided that now is the wrong time to put any further downward pressure on SA’s fragile economy, where GDP is growing at less than 1% a year. The word he used was “foolhardy”.
He added: “In difficult situations like this, it would have been far preferable to have had deeper tax cuts.”
Instead of plugging the gap with more revenue receipts, borrowing will increase, and efforts will be made to cut spending, mainly by tackling the oft-inflated wage bill of our public servants.
The taxman is being told to become more efficient, so do await that 5am knock on the door.
Undoubtedly, some budget groupies will find some fault with this, but the Finance Minister did say in his budget speech that there will be some easing of personal income tax and that he is looking at a future reduction in corporate tax.
Excise duties are up across the board, and there will be new taxes on vaping and hubbly bubbly, with higher fuel levies and more to pay on supermarket plastic bags.
Meanwhile, some of the scammiest of scam churches can now expect to have to pay tax. Fewer luxury limos for the mammon-loving bogus men of god.
Manufacturers get a raw deal – a major investment incentive known as 12I is being killed off, while the government is speeding ahead with a review of the whole industrial incentive framework.
Less drama, then, in the speech itself than we had expected.
That will come if rating agency Moody’s clobbers SA with a further downgrade.
Tito had little room for manoeuvre. So we shall have to wait and see if he has been prudent enough to stave off a kick in the teeth by those moody buggers at Moody’s