'Nene has no choice but to increase taxes'
Finance Minister Nhlanhla Nene is set for a taxing time when he delivers his first budget tomorrow.
CAPE TOWN - Finance Minister Nhlanhla Nene is set for a taxing time when he delivers his first budget tomorrow and so is the South African consumer.
A sluggish economy, reduced revenues and the need to reduce government debt have left Nene with next to no room to manoeuvre.
Some economists believe Nene has little choice but to raise taxes.
Investec chief economist Annabel Bishop says, "It's not going to be a once off thing of higher taxes this year, it's actually could be rolled out over the next three years. I think that's going to be the nature of this 2015 budget speech, that's going to show South Africa's tax course for the next three years."
Iraj Abedian of Pan African Investment and Research agrees Nene's budget plans could deal with increasing the taxes and cut some expenditure.
"There is almost no doubt that the minister in the short-term has very little options but to cut some of the expenditure in real terms and at the same time increase the taxes."
Nene's first budget policy statement in October was warmly received, but he warned then that government was going to need several billion more rands than it was expected to rake in through taxes.
He needs to find an extra R12 billion to help fund this year's budget.
With little choice but to raise taxes, the question is whether Nene will target top earners or an already squeezed middle class.
Load shedding has already dented the country's growth prospects.
Nene has got his work cut out for him to find good news to deliver to the nation.