Some economists divided on possible tax hikes in Godongwana's budget

JOHANNESBURG - Some economists are still divided on the possible tax hikes when Finance Minister Enoch Godongwana tables the national budget on Wednesday, outlining government's financial, economic, and social priorities.

Economists have been weighing in on the latest concerns that consumers will take a big knock as government looks to drive up revenue.

Revenue collection for the 2024/25 fiscal year looks set to underperform the original budget estimate in the 2024 figures.

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National Treasury forecast total tax revenues of R1.8 trillion in budget 2024, a growth of about 7% on what was actually collected for the 2023/24 fiscal year.

Treasury later revised that figure down by R22 billion, mainly led by a substantial drop in personal income tax, value-added tax (VAT) and fuel levies.

As government battles high expenditure, it's expected to turn to tax again to make up for its wide deficit.

Investec’s chief economist, Annabel Bishop, said businesses and households were likely to be spared massive hikes in corporate and personal income taxes.

"We think that income tax, corporate tax will be left unchanged," Bishop said.

Citadel's chief economist, Maarten Ackerman, partly agrees but said that VAT and fuel levies would be the low-hanging fruit.

"But I think the Treasury is well aware that they can't keep on hiking tax."

Excise taxes, also known as sin taxes, on cigarettes, alcohol and sugar drinks are largely expected to be hiked.