fuel levy<\/strong>, and their impact on low income families in the country. It said that it expects Gigaba’s speech to include an announcement on increases to the General Fuel and Road Accident Fund levies, both of which are included in the price of petrol and diesel.<\/p>\nWith a budget shortfall of around R50 billion in 2017, this may seem an ideal mechanism for the minister to source additional revenue, it said.<\/p>\n
\u201cIt will impact the poorest of the poor hardest, as they mostly rely on public transport. Road users in general are already under enormous financial strain; a big increase to these levies will certainly place an even greater burden on them,” the AA said.<\/p>\n
Currently the general fuel levy is R3.15 and the Road Accident Fund levy R1.63. Together these levies total R4.78, which roughly makes up 33% of the total cost of a litre of fuel. The AA said that an above inflation hike could see a\u00a029c\/l increase to the current levies.<\/strong><\/p>\nAckerman said that South Africans should also expect a range of other tax measures to be implemented towards assuaging populist ANC factions, and reaching a compromise between government, civil society, business and labour on the measures taken to increase revenue.<\/p>\n
\u201cRaising corporate tax rates is unlikely, as this could impact business\u2019 incentive to create more jobs, but both Capital Gains Tax and personal income tax rates for upper income earners are expected to increase.\u201d<\/p>\n
\u201cSome form of wealth tax<\/strong> on the net-asset-value of an individual\u2019s estate could also be a possibility,\u201d he said.<\/p>\nAccording to Ackerman, February\u2019s budget speech is unlikely to be all doom and gloom, however. \u201cFor example, revenue and tax collection are likely to be better than projected in October\u2019s MTBPS, as economic growth is expected to reach 1.3% rather than the previously estimated 0.7%.\u201d<\/p>\n
He said that the biggest threat that still remains to the economy is the upcoming credit ratings decision by Moody\u2019s due to be announced in March.<\/p>\n
A downgrade would see the country\u2019s rating drop from investment grade to \u201cjunk status\u201d, excluding South Africa from Citigroup\u2019s World Bond Index and triggering a flight of investment capital.<\/p>\n
\u201cHowever, Moody\u2019s held back from making a decision in November, and there have since been many positive developments which now make a downgrade less likely,\u201d Ackerman said.<\/p>\n
\u201cFor example, political uncertainty over ANC leadership has been resolved with the election of (Cyril) Ramaphosa, who also seems to be playing hardball in seeing that the right policies are delivered and dealing with corruption.\u201d<\/p>\n
\u201cPoor governance and corruption at state owned enterprises was the next biggest concern cited by ratings agencies and we\u2019ve also seen action already being taken, beginning with the replacement of the board at Eskom.\u201d<\/p>\n
Ackerman pointed out that that ratings agencies will be watching to see how funding and liquidity issues at the SOEs are dealt with in the budget speech, given the extreme risk to the fiscus posed by extensive government guarantees to Eskom, South African Airways, the SABC and the South African Post Office.<\/p>\n
\u201cRamaphosa is the best person to act as a bridge between government, business and SOEs, so the next best outcome would be to see government under his leadership welcome some form of private participation or partnership towards ensuring that the SOEs funding needs are met and that they are run effectively and profitably,\u201d the economist said.<\/p>\n
\nRead: This is who could qualify to have their debt written off in 2018<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"South Africa\u2019s growing debt levels and alarming budget deficit means that consumers should prepare for the possibility of an increase in the VAT rate, cautions Maarten Ackerman, chief economist and advisory partner at Citadel.<\/p>\n","protected":false},"author":10,"featured_media":32548,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[11282,26],"class_list":["post-221965","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-citadel","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/221965","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=221965"}],"version-history":[{"count":6,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/221965\/revisions"}],"predecessor-version":[{"id":221977,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/221965\/revisions\/221977"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/32548"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=221965"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=221965"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=221965"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}