In this edition of Business Law Focus, host Evan Pickworth speaks to ENSafrica tax experts Charles De Wet and Ntebaleng Sekabate, about the good, bad and ugly of the upcoming national Budget, due on February 21.
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The context
This is a Budget with a twist, coming in an election year. The International Monetary Fund (IMF) has cut SA’s growth forecast to just 1% for 2024 because of logistics problems and power shortages, so questions remain about how much more taxes can be raised to cover tax gaps and finance state-driven expenditure. Bigger questions about the future of parastatals and the rising debt burden will have to be asked. Businesses are, meanwhile, desperate for growth-orientated policies, but these still seem few and far between.
Finance minister Enoch Godongwana has said corporate taxes will not be raised, so where else can revenue be found? A VAT increase will surely be off the table as it will not be popular and most taxpayers are already under immense financial strain due to higher inflation and interest rates.
The budget allocation will therefore have to strike a balance between growing the economy and supporting the vulnerable, amid limited resources.
Key areas to watch will be spending priorities of government; addressing a large budget deficit; stabilising state-owned entity finances; managing the energy crisis; tax revenues; debt sustainability and municipal finances.
The SA Revenue Service seems to be zoning in on big business and wealthy business people for any compliance failures, so further tax efficiency measures can be expected. News on tackling the energy and ports will, however, be the welcome relief the economy most needs.
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