Tax hikes will not help economy grow, expert warns
As South Africa seeks to find ways to grow its sluggish economy and create jobs, experts are warning government that any hike in taxes would not be a good idea.
Finance Minister, Tito Mboweni will table his budget in the National Assembly on Wednesday.
He is expected to outline governments economic recovery plan as the county seeks to bounce back from the pain inflicted by the Covid-19 lockdowns.
"Tax collection is going to be significantly down from a year ago and it is unlikely that the minister will push up tax rates, because the economy has reached the point where increasing tax rates won't result in more tax but will dampen the economy," says FNB wealth manager Andrew Duvenhage.
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"On the expenditure side, we expect the minister to focus on reigning in the public sector wage bill and trying to limit the amount of money we spent on municipalities and other parts of government."
Duvenhage says Mboweni's budget must focus on economic growth.
"Ultimately. what we need to see is a focus on areas such as the mining sector, allowing them the confidence to invest and take advantage of slightly higher commodity prices. We would also love to see more focus on deregulation that will allow businesses to operate easily and government must focus on being a facilitator of business than a participant."
