Ahead of mid-term budget, economists say two-pot tax collection good for public finances
That figure is again expected to surge towards the end of the year, including withdrawals set aside for households to spend over the festive season.
FILE: Finance Minister Enoch Godongwana delivers his maiden Medium-term Budget Policy Statement in Parliament on 11 November 2021. Image: GCIS.
JOHANNESBURG - As the National Treasury prepares to deliver the Medium-Term Budget Policy statement this week, some economists believe tax collection from the two-pot system could add some much-needed relief for the country’s public finances.
So far, the two-pot reforms that allow for an early withdrawal from pension funds have boosted tax revenue by more than R6 billion since its implementation in September.
That figure is again expected to surge towards the end of the year, including withdrawals set aside for households to spend over the festive season.
READ: SARS makes R6 billion in taxes from two-pot system withdrawals
While revenue is expected to perform better the chief economist at Efficient Group, Dawie Roodt, said expenditure remains an issue.
"The major problem is that we are just spending too much money. The Minister of Finance knows this and he is trying to keep a lid on State expenditure, but we are just spending too much money. There are too many people standing outside the minister’s office asking for too much money.
"There are civil servants, there are State-owned enterprises, local authorities, we need money for the NHI [National Health Insurance], we’re talking about basic income grant money – all those things cost many billions of rands and we simply do not have the tax base or the economy to support that kind of expenditure," said Roodt.