2024 Budget Speech: Taxpayers could catch a break, but businesses ambling in ‘zombie zone’ - Deloitte

JOHANNESBURG - Experts at auditing firm Deloitte believe taxpayers won’t be stretched to their breaking point when Treasury tables the February budget later in the month.

The country’s public finances are in dire straits as rocketing borrowing costs and ballooning government spending put pressure on the fiscus.

Minister of Finance Enoch Godongwana will have detailed plans to avert a fiscal crisis.

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The South African economy struggling to return to the desired levels of growth, and taxpayers’ purses already stretched, means the South African Revenue Service (SARS) and Treasury will have to balance increasing tax revenue collection without crippling the economy or taxpayers.

With a widening fiscal deficit, analysts expect Treasury to consider tax measures to raise additional tax revenue of about R15 billion for the 2024/25 tax year.

Despite this, tax and legal expert at Deloitte, Billy Joubert, said he did not believe taxpayers would see substantial changes to taxes in the February budget.

“You can only squeeze taxpayers so hard. In any case, putting up tax rates has precisely the opposite effect to the primary thing we need, which is to grow the economy.”

Joubert believes the R15 billion tax bill will be clawed back by not adjusting personal income tax brackets for inflation in what’s known as the bracket creep.

BUSINESS WOES CONTINUE

Deloitte did warn of a challenging business environment in the country again this year, as global and domestic headwinds take their toll.

This includes supply-chain disruptions caused by geopolitical tensions, as well as the crisis in the energy and logistics sector.

In the firm’s latest forecast ahead of the upcoming annual budget speech by Godongwana, Deloitte painted a grim picture for local businesses.

It’s understood a drop in the average monthly salaries means consumers have less disposable income in their pockets, impacting their buying power at the tills.

Turnaround and restructuring director at Deloitte, Jo Mitchell-Marais, said the retail industry was expected to take the biggest knock.

“What do you fix first, how do you fix it? That’s a real challenge. I think from a business perspective, there’s a lot we can do and that relies on management and the executive, and their ability to respond to the changing environment and the economy.”

Mitchell-Marais said she expected the difficult trading conditions to persist.

“And for us, it’s this environment where companies, there’s no room for them to move. They’re not filing for liquidation; they’re not filing for business rescue. They’re in what we call a zombie zone, where they’re able to pay to pay their operating expenses, perhaps service their debts, but no more. There’s no capital being invested in their growth, and they are one event away from a potential insolvency.”