Concerns are growing about a prospective tax increase that would put more burden on the nation’s economy, which was already in deficit at the start of the fiscal year.
“Fundamentally, South Africa has a deficit because we spend more than we earn. And there is only one way to earn more.
A country earns money by selling goods to other countries in exchange for their money.
To not run at a loss, you need to spend less and earn more. For people and countries.
Increasing resident tax in a country to restore a deficit is one of the dumbest things anyone can do.” – Anje Kruger, CEO at Hibarri
In recent months, South Africa has faced economic and geopolitical challenges, including the suspension of foreign aid by the United States over allegations of racial discrimination. These developments have raised questions about the country’s commitment to equality and inclusivity, especially considering impending tax increases that could disproportionately affect economically disadvantaged citizens.
“On a fundamental level, taking more money from the amount that’s circulating in the economy, in the form of tax, won’t change anything. It will just decrease investment and entrepreneurship.
The problem is misdirected funds. We are not spending enough money on promoting South African minerals and resources from a government level.”
The South African government has surplus expense, including additional bailouts for state-owned enterprises and an extension of the Social Relief of Distress (SRD) grant. Economists predict that common tax increases may occur, including hikes on sin taxes for alcohol and tobacco, as well as adjustments to the fuel levy. The last Value Added Tax (VAT) increase in South Africa was in 2018, raising it to 15%.
“Countries that increase tax fundamentally increase tax because they are not making money. But countries make money by selling things to other countries, which is done by entrepreneurs.
If a country does not have money, penalizing the actions that make money in the first place will have the inverse effect of what is needed.
The problem with the suggested tax increase is that it penalizes people that increase exports and build the economy, meaning, they are disincentivized to build the economy because they get taxed to build the economy.”
Observers are concerned that freezing tax brackets will erode salary increases, further burdening taxpayers. Kruger emphasized that punitive tax measures on production and entrepreneurship are counterproductive.
“We need to promote what we have: food, resources, minerals.”
The International Commodity Summit (ICS2025), hosted by Hibarri, South Africa’s top online commodity trading platform, expected to bring together thousands of global executives from all industries.
The summit, a platform for discussing the future of commodity trading in South Africa, comes at a crucial time when the country is facing a treasury deficit of over R300 billion. With taxpayers already stretched to their limits, the prospect of increasing taxes is alarming.
“Tax alcohol. Tax gambling. Tax consumption. Not production. Tax imports. Not exports. Tax laziness, not hard work.” Kruger continues.
Instead of raising taxes and deterring investors, South Africa should prioritize strategic reductions in government expenditure and optimize its fiscal policies.
The primary focus should be on decreasing government spending, as research shows this can effectively reduce deficits. Specifically, cutting current expenditures, which have minimal impact on economic growth, is preferable to reducing capital expenditures, which could negatively affect growth.
South Africa needs to reconsider its fiscal policy adjustments. By eliminating tax expenditures, which are government spending through tax code provisions, the country can lower deficits without increasing tax rates.
This involves removing subsidies and special tax breaks that diminish tax revenue.
The Treasury should also reconsider its approach to expenditure management and balanced revenue creation. This is a crucial step that can take place while concurrently managing income and spending.
Such a strategy assures that revenue gains do not result in proportional spending increases, which would jeopardise deficit reduction efforts.
The South African state requires structural reform to enhance the efficiency of government operations and reduce waste, contributing to deficit reduction without necessitating tax increases.
Another potential strategy is fiscal synchronization, which aligns tax policies with government spending to manage deficits more effectively. This involves a coordinated fiscal policy approach that balances both sides of the budget.
Hibarri is a testament of what South Africa can produce through innovative and economic creativity, South Africa has similar mergers and start-ups that reflect this authenticity.
Kruger warned that: “If South African doesn’t rapidly deregulate and create better tax incentives, we will become an impoverished nation”.
The discussions at the International Commodity Summit will shape the future of commodity trading and potentially influence the country’s economic policies moving forward.
Keynote discussions will focus on the two main themes needed for economic transformation in South Africa – which is the intergovernmental debate, and the capital markets in commodities debate.
• Liquidity management is crucial for businesses, and the optimal balance of leveraged finance, private equity, and direct ownership is essential.
• The capital markets discussion covers futures, options, swaps, global trends, and geopolitical factors.
• It also explores the optimal liquidity/leverage/equity balance, securitization vs unsecured loans, effective capital raising strategies, and key lessons for entrepreneurs and CFOs entering the capital markets arena.
“If you look at emerging economies like the United Arab Emirates, they reduced tax and suddenly an influx of foreigners flocked to their country to build the economy and leave. Dubai was basically built in 24 years. Incentives stimulate economic growth.”
In South Africa, financial distress frequently escalates into a crisis before stakeholders intervene. The Deloitte Restructuring study 2024 (restructuring study) finds that organisations usually postpone addressing distress until late-stage triggers, such as covenant violations or missed payments, occur.
By that point, the window of opportunity for recovery has shrunk dramatically, with far-reaching social and economic consequences.
The International Commodity Summit 2025 is a premier event that convenes top economic experts, government officials, and industry leaders from across the globe.
This year’s summit specifically addresses the challenges faced due to shifts in U.S. economic policies, with an emphasis on mitigating the negative effects on nations such as South Africa. Participants will engage in rich dialogue, share successful strategies, and foster international cooperation aimed at rebuilding economic stability.
For further information on The International Commodity Summit 2025, including registration details, sponsorship opportunities, and the full agenda, please visit
https://internationalcommoditysummit.com