Nene: Tax hike looms
The Finance Minister said R15bn in revenue is needed to improve the country’s financial status.
CAPE TOWN - Finance minister, Nhlanhla Nene, has warned if the country doesn't get to grips with dealing with its budget deficit, austerity measures could be necessary.
Nene has painted a sombre picture of the country's financial situation with tax hikes looming and reduced expenditure on the cards.
Treasury estimates South Africa's debt could reach R2.4 trillion by the 2017/18 financial year.
Delivering his medium term budget policy statement yesterday, Nene announced a raft of measures to rein in government spending.
One of the questions posed to Nene was if austerity measures were a possibility in the future, to which Nene responded it was a real possibility.
"What we need to balance is to ensure our interventions do not have unintended consequences. Those include stifling the economy when we are trying to deal with our financial crises situation."
Nene says there'll be short term pain over the next two years, but that it will be for the country's long term gain.
The minister says R15 billion in revenue needs to be raised annually.
He announced a revised growth rate of 1.4 percent down from 2.7 percent, which was the target set earlier this year.
Nene raised issues such as job creation and ensuring public spending promotes growth as some of government's top priorities.
"As the NDP says we must work together as partners to revive investment, avoid lengthy production stoppages, improve public services, strengthen local accountability and generate confidence in our economy."
Meanwhile, the South African Revenue Service (Sars) says it's all systems go to increase revenue collection as the country battles slow economic growth.
The revenue's Randall Carolissen acknowledges the fall in revenue.
"The revenue currently is under pressure. The reduction in revenue is testimony to that. It will still remain tough going forward if we bear in mind that the economic forecast has been slashed by a half from 2.7 to 1.4 percent. It's going to be a tough environment going forward, but Sars always responds well to these challenges."