In this edition of Business Law Focus, host Evan Pickworth interviews Ntebaleng Sekabate and Charles de Wet, executives in ENS’ tax practice, to unpack themes and trends to expect ahead of the budget speech on February 19.
Listen to the conversation:
The context
In October, SA’s medium-term budget policy statement (MTBPS) showed that the Treasury’s ongoing attempt at fiscal consolidation is facing severe headwinds. Low growth is holding back many plans, even as interest rates and inflation ease.
So, with spending plans under pressure and income falling short, where else can the Treasury look but at higher taxes to plug the shortfall? This raises the prospect of tax increases by stealth, rather than a big bang wealth tax on the rich come February 19. The weak economic backdrop also raises risks of a worsening debt-to-GDP outlook.
While the usual sin taxes will be increased, question marks remain over the dreaded bracket creep (where inflation pushes taxpayers into a higher bracket but with no increase in real purchasing power), where scant support has recently been provided. Changes to estate duty or trusts will need to be monitored, as well as how medical tax credits are treated in the face of NHI.
Meanwhile, the proposed expansion of the basket of essential foods to be exempted from VAT remains on the radar.
On the corporate tax front, watch for updates on the Global Minimum Tax Bill, where extra revenue could be expected.
The minister will, no doubt, be walking a tightrope on February 19, with long-suffering taxpayers waiting with bated breath to see how much more they may need to be dipping into their pockets.
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