Tax measures only work over short term – economist
Efficient Group Francois Stofberg believes the tax measures put in place by Treasury to combat the economic fallout from the Covid-19 pandemicwill only work over the short term.
President Cyril Ramaphosa announced an unprecedented R500 billion social and economic support package to mitigate the impact of the coronavirus pandemic on Tuesday evening.
On Thursday, Treasury announced additional measures.
The new measures are set to provide support of around R70 billionthrough a reduction in taxes or deferral of payments.
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A skills development levy holiday for four months is also on the cards as well as a 90-day deferral for alcohol and tobacco excise duty due for May and June.
There are also employment tax incentives to pay up to R750 to all employees with an income below R6,500 per month.
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Stofberg says there is a fine balance to be struck between preserving the economy and saving livelihoods, and saving lives.
"So, in terms of what government is doing to prevent the spread and the possible implication to lives, they are doing all they can and it's working.
"What they doing now with tax reform is working and it's definitely going to save jobs in the short term, but you can't just have a short term.”
Stofberg warns the country’s sluggish Gross Domestic Product (GDP) has already put us at a disadvantage.
"You have to have a longer-term view in terms of how you're going to save and protect the livelihood in the long term.
"By not growing this economy at the rate that it is supposed to be growing, you have already impoverished South Africans and impoverishment kills more people than lockdown and viruses."