Bernard Sacks of Mazars, a global organisation specialising in audit, accounting, tax and advisory services, said there was a possibility an increase in VAT could be introduced to make up for shortfalls in tax revenue, reports the Weekend Argus.
“We are in a technical recession; that means the economy is shrinking, and with that comes a reduction in business activity and possibly a reduction in income tax (revenue),” Sacks said.
While tax rates are announced during the annual Budget in February, Sacks said it was important to hear what the new minister would say in the medium-term budget policy statement planned for 24 October.
Tito Mboweni was sworn in as finance minister following the resignation of Nhlanhla Nene.
In February, a VAT hike from 14% to 15% was announced.
According to experts, the SA Reserve Bank has cut its estimate for South African gross domestic product expansion to 1.2% from 1.7%, while the World Bank’s most recent predictions place the country’s GDP growth at 1%, and the International Monetary Fund has almost halved its expected growth rate for the country from 1.5% to 0.8%.
Mboweni will be presenting the medium-term budget which will reveal whether or not the reduced consumer spending, low business growth and spiralling fuel costs during the course of 2018 will lead to a revision of revenue collection targets.