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Budget likely to see tax hikes & public spending cuts

Economists say the finance minister doesn't have much of a choice & his budget will hurt consumers.

Finance Minister Pravin Gordhan. Picture: GCIS

JOHANNESBURG – Economists say Finance Minister Pravin Gordhan hasn’t been left with much of a choice and his budget will hurt consumers.

Gordhan will table his 2017/18 budget in Parliament on Wednesday afternoon with major increases in personal income tax, sin taxes and possibly Value Added Tax (Vat) expected.

Speculation that Gordhan will be fired has been renewed since an announcement by the African National Congress (ANC) that former Eskom CEO Brian Molefe will be appointed as a Member of Parliament (MP), possibly ahead of a position in Cabinet.

South Africans can expect a number of increases once Gordhan tables his highly anticipated budget.

Economist Kevin Lings says Gordhan has been put in a tough position and consumers are expected to be hit the hardest.

“I’m expecting a broad range of tax increase that will unfortunately hurt the consumer but the minister doesn’t have much choice. I don’t think that we’ve got the scope to borrow an additional amount.”

Economist Lesiba Mothatha agrees that the focus will be on tax increases.

“Personal income taxes are likely to go up. We’re also likely to see an increase in the wealth-related taxes. The other items could include the fuel levy.”

Gordhan may also expand on the contentious sugar tax, which is still being debated in Parliament.

(Edited by Leeto M Khoza)

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