All eyes are firmly fixed on South Africa as finance minister Malusi Gigaba prepares to deliver his first Medium-Term Budget Policy Statement (MTBPS) on Wednesday, 25 October.<\/p>\n
The statement marks Gigaba’s first official budget speech as finance minister since the controversial firing of his predecessor Pravin Gordhan in March 2017.<\/p>\n
In a new report published on Wednesday, advisory firm Deloitte said that the MTBPS is expected to come under far greater scrutiny than usual, primarily due to recent political and economic developments in the country.<\/p>\n
\u201cThis year, allegations of \u2018state capture\u2019 and corruption in South Africa occupy the world stage, while the South African government remains pre-occupied with bailouts for state-owned entities,” said Nazrien Kader, managing partner at Deloitte Africa’s Tax & Legal Services.<\/p>\n
“Economists estimate that revenue collections will fall short of budgets, continuing the steady downward trajectory (from an estimated shortfall of R30 billion earlier in the fiscal year to between R50 billion to R65 billion more recently) and rating agents have the country on watch,\u201d said Kader.<\/p>\n
Should Gigaba indicate that revenue collections fell far short of estimates, another ratings downgrade was likely, Deloitte said.<\/p>\n
Other main considerations include:<\/p>\n
Sugar Tax<\/strong><\/p>\n According to Deloitte, the budget could see further clarification on the sugar tax, with additional\u00a0rules for the tax still expected from SARS.<\/p>\n This should provide clarity on administration and compliance for importers and local manufacturers of non-alcoholic beverages.<\/p>\n However, South Africans should only expect its implementation in 2018, said Deloitte.<\/p>\n Carbon Tax<\/strong><\/p>\n Deloitte said that it was still unclear whether a comprehensive carbon tax will be implemented.<\/p>\n Given the complexities of calculating carbon emissions, sufficient time will be needed for emitters to prepare, it said.<\/p>\n “Mandatory greenhouse gas reporting has been introduced by the Department of Environmental Affairs. Emitters will be required to report their emission for 2017 by March 2018. Careful consideration should be given to these reports as it may very well form the basis of a carbon tax.”<\/p>\n Government Incentives and Allowances<\/strong><\/p>\n Agro-processing and infrastructure support are expected to be priority areas for incentive support, in line with the Industrial Policy Action Plan, along with programmes that fast track transformation and focus on supplier and enterprise development.<\/p>\n Another round of the Jobs Fund may also follow, the group said.<\/p>\n National Health Insurance (NHI)<\/strong><\/p>\n It remains unclear whether the minister will prioritise the National Health Insurance (NHI) and address the proposed NHI funding mechanisms, said Deloitte.<\/p>\n Questions still remain about the funding shortfall and the impact on consumers.<\/p>\n
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