Budget 2023
Share

Mini budget: Expect up to R12bn tax revenue shortfall - economist

Cape Town – Finance Minister Pravin Gordhan is unlikely to make any major tax announcements when delivering his mini budget on Wednesday, said Stanblib economist Kevin Lings. 

Speaking to Fin24 by phone, Lings said Gordhan will at most update revenue projections, but as a rule, tax changes are only announced in the Budget Review on February of each year. “So, I don’t anticipate any.” 

Tax revenue has come in below National Treasury’s projections so far and some areas are concerning, said Lings. “Value-added tax (VAT) receipts are meaningfully behind and so are import duties. The only area that wasn’t behind was transfer duties on property. There aren’t dramatic lapses in revenue collection, but it is enough to be a bit worrying.” 

Lings said currently he’d expect a R10bn to R12bn tax revenue shortfall.  The economy is quite weak – particularly retail sales and imports have slowed, which will bring tax revenue under pressure.” 

On the other hand, non-tax revenue may yield better results. “National Treasury has announced a tax amnesty that comes into effect from October this year through to March next year for taxpayers who have taken money offshore and who need to disclose it. That may yield a little bit of extra funding and could help a little bit to offset the shortfall.” 

Sugar tax

Lings was of the view that Gordhan will give an update on the implementation of a sugar tax. 

In his February budget speech, the Finance minister said sugar tax will be implemented from April 1 2017. 

“There have been some presentation from industry to Treasury in this respect and maybe some of this representation may lead to adjustments in the sugar tax. At this stage the sugar tax in its current envisaged form would bring about R3bn to R4bn to the fiscus, so that is meaningful, but clearly the impact, especially on the soft drinks industry could be substantial.” 

The beverage industry in August this year, claimed that a 20% surcharge on sugar-sweetened beverages, as is envisaged by National Treasury could lead to job losses of 60 000.

In addition, the Sugar Association of SA (Sasa) argues that the intended sugar tax should be put on ice, at least until a study is completed to establish the role of sugary soft drinks in the South Africans’ diet.

Other taxes 

Lings said Gordhan could also give hints about other taxes that could be hiked in February 2017. “He announced in February that we can anticipate higher taxes. Taxes that could go up could be a dividend tax, estate duty tax and even some forms of wealth tax. And then one would expect further adjustments to individual taxes in terms of thresholds and maybe the top marginal rate.”

He didn’t expect an adjustment to company taxes, though.  

Carbon tax 

There could also be word on a proposed carbon tax, which has been delayed for some time. “I assume investigations have been done and in February the minister announced that the carbon tax is going ahead and that it will be implemented next year.”

Economists, energy experts and the Chamber of Mines were among stakeholders who - during a public hearings process - submitted papers expressing their views on carbon tax.

Many industry players have warned that a carbon tax will have a completely negative impact on business growth and may see certain businesses in the industrial sector closing their doors. 

Lings said the concern remains affordability. “Given how weak the (manufacturing and mining) industry is – can we really afford it, given how much damage it could do to a fragile industrial sector? So one would want to know if a carbon tax is going ahead and hopefully there will be a little more detail on how it’s going to work.”

Read Fin24's top stories trending on Twitter:

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.96
-0.3%
Rand - Pound
23.95
-0.2%
Rand - Euro
20.47
-0.0%
Rand - Aus dollar
12.36
-0.1%
Rand - Yen
0.13
-0.3%
Platinum
911.00
+1.6%
Palladium
1,012.02
+1.0%
Gold
2,213.44
+0.9%
Silver
24.79
+0.6%
Brent-ruolie
86.09
-0.2%
Top 40
68,346
+1.0%
All Share
74,536
+0.9%
Resource 10
57,251
+2.9%
Industrial 25
103,936
+0.6%
Financial 15
16,502
-0.1%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders