The South African Treasury is rolling in money and will be able to give taxpayers back some R10-billion rand when the 2003/4 Budget is presented on Wednesday, PLJ Financial Services chief economist Dawie Roodt said.
He personally wished for a one percentage point increase in the Value Added Tax (VAT) rate to 15%, but doubted whether this would happen.
“The Treasury has money for Africa due to far better than expected revenue inflows. I estimate that revenue will reach R280-billion this fiscal year, which is R14-billion higher than projected. I expect the Minister of Finance to keep to the figures given in the Medium Term Budget Policy Statement (MTBPS) of October last year. This means he will show revenue at R310-billion in the coming fiscal year and expenditure at R333-billion to give a deficit of R23-billion or 1,8% of gross domestic product (GDP).
“I am expecting a 1% reduction in personal income tax rates and a R20 000 adjustment to tax brackets for individuals. This will cost the fiscus some R10-billion. I expect no change in the Secondary Tax on Companies (STC), which is a tax on distributed dividends in the hands of the company.
“I would prefer that small nuisance taxes such as the Marketable Securities Tax (MST), the skills development levy, estate duty, donations tax, transfer duties and the like, be abolished. These small-fry taxes are a nuisance in terms of administration both for the tax-payer and the revenue service.”
The expected R23-billion deficit in the coming fiscal year would be financed by privatisation receipts of R5-billion, Treasury Bills of R6-billion, domestic bond issuance of R9-billion and foreign loans of R11-billion. The cash balance would be reduced by R8-billion.
Total South African government foreign currency bonds outstanding at the end of June 2002 was $4,7-billion, with total South African foreign currency denominated foreign loans at $24,7-billion or around 25% of GDP. -I-Net Bridge