Finance Minister Enoch Godongwana says hiking personal and corporate tax in 2024 is still on the table, even though it’s likely to be a tough call by Treasury.<\/p>\n\n\n\n
Speaking to SABC News<\/a> on the sidelines of the World Economic Forum in Davos, Godongwana said that hiking taxes in the current economic environment in South Africa would be difficult – but he couldn’t rule it out as a revenue source.<\/p>\n\n\n\n “Increasing taxes in this environment is a difficult exercise. I’m not ruling it out, but it is a difficult exercise,” he said.<\/p>\n\n\n\n “Although the government cut corporate taxes in 2022, putting them back up would be very hard,” he said.<\/p>\n\n\n\n “Additionally, consumers in South Africa are in a tight space now for personal income tax. That\u2019s also going to be a difficult area to go into.<\/p>\n\n\n\n \u201cI can tell you now, we are operating in a fairly constrained fiscal space, so the message we are likely to put across in February is going to be a difficult one,\u201d he added. <\/p>\n\n\n\n Finding money<\/strong><\/p>\n\n\n\n In his mid-term budget tabled in October, the minister said he would raise borrowing, cut costs, and increase taxes amid warnings from the Treasury that it was running out of money and debt was spiralling out of control.<\/p>\n\n\n\n The mid-term budget pencilled in an additional R15 billion to be raised by taxes in 2024\/25<\/strong>, but analysts noted that this could likely be covered by not moving the tax brackets to account for inflation. <\/p>\n\n\n\n South Africa\u2019s government is facing a deficit of around R347 billion for the 2023\/24 financial year \u2013 over 40% more than the previous year.<\/p>\n\n\n\n It currently stands at R312 billion, while the revised deficit for the full fiscal year is projected at R347 billion \u2013 a substantial increase from the R247 billion deficit in 2022\/23.<\/p>\n\n\n\n Investec chief economist Annabel Bishop noted<\/a> that gross loan debt is projected at 74.7% of GDP for 2023\/24, significantly up from 70.9% in 2022\/23.<\/p>\n\n\n\n The escalation of government debt is particularly egregious when considering that debt was sitting at only 23% of GDP in 2009. <\/p>\n\n\n\n Put differently, budget projections show that for every R1 the government spends, 22 cents goes off to paying debts. This has risen from 7 cents in 2009.<\/p>\n\n\n\n