I GOT most of my budget predictions wrong. Starting off, I did not think the South African Revenue Service would get within R20billion of target. Wrong. SARS will exceed the target for 201314. The budgeted tax collections from a year ago were spot-on.
This means the annual fiscal deficit will be about 4% of GDP. So now South Africa really can show the critics that it is on its way to containing the national debt to below 3% of GDP by 2017. A year ago this did not seem possible. This is the stuff we need to face off a downgrade in the sovereign debt rating.
If SARS had not reached the 2014 target, we faced the daunting prospect of supertax rising above 40%. It was not necessary. We even got a fiscal drag adjustment of R9-billion, exceeding last year’s R7-billion.
My Great Danes could have predicted that carbon emissions tax would be delayed. The legislation is far from settled and now that the Aussies have chucked out theirs, one wonders if South Africa will not just let it die. But what impressed me most was that fuel and electricity levies were not increased to recoup the loss caused by carbon emissions tax delays. In fact, the fuel levy increase of 20c a litrewas below last year’s. The electricity levy was not increased.
So we live on. But where is South Africa missing the plot? R10 a day or R310 a month for a child grant is just not good enough. Perhaps we should be trading off an increased VAT rate against substantially increased social grants.
And surely our environment is worth more than R7-billion in a R1.2-trillion budget? Fracking in the Karoo is going ahead. Both Jacob Zuma and Pravin Gordhan have said so.
I also hoped the terms of the employment tax incentive would be reconsidered. But they were not mentioned.
As a taxpayer budget, 2014-15 exceeded my gloomy expectations. I am happy. But I am one of the 5.3 million taxpayers who exceed the tax threshold. The majority of our 53 million South Africans are going to have to remain very patient. And the achievement of the objectives of the National Development Plan must seem very distant.
By Prof Matthew Lester
Source: Sunday (Business) Times
Lester is a professor at the Rhodes Business School, Grahamstown