Budget Speech: 'We're unlikely to see an outright tax rate increase'

Lester Kiewit interviews Lisette Ijssel de Schepper, Senior economist at the Bureau for Economic Research.

Listen below.

Finance Minister Enoch Godongwana is poised to unveil a budget deemed crucial for the immediate trajectory of the nation's economic well-being.

With a significant revenue deficit, increasing taxes stands out as a primary strategy to regain lost fiscal stability.

Alternatively, as previously discussed by the Minister, reducing provincial budgets remains another avenue, potentially affecting vital services such as law enforcement and healthcare.

Unfortunately, it doesn't look like a silver lining is on the cards, says Ijssel de Schepper, especially as it comes against the backdrop of very 'sluggish' economic growth.

She adds that we're unlikely to see an outright increase in the tax rate to generate additional revenue for government's R15 billion shortfall.

Alternatively, we might witness what's referred to as "bracket creep," where inflation causes individuals' incomes to rise into higher tax brackets, consequently leading taxpayers to pay more tax even without an increase in the tax rate.

"It's a very difficult time to be formulating long-term fiscal policy plans."

- Lisette Ijssel de Schepper, Senior economist – Bureau for Economic Research

"We're unlikely to see an outright increase in the tax rate."

- Lisette Ijssel de Schepper, Senior economist – Bureau for Economic Research

"At the moment, we don't think they'll increase the VAT rate."

- Lisette Ijssel de Schepper, Senior economist – Bureau for Economic Research

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Budget Speech: 'We're unlikely to see an outright tax rate increase' – Economist

Today at 2pm, Finance Minister Enoch Godongwana will deliver the 2024 Budget Speech.