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Tax hikes won’t solve SA’s fiscal woes

Tax hikes won’t solve SA’s fiscal woes

CAPE TOWN: South Africa suffers from a trifecta of social challenges, namely inequality, poverty and high levels of unemployment. This, when coupled with the state of economic stagflation, rampant government expenditure and bureaucratic paralysis, is creating unprecedented fiscal pressure.

Tax revenue, as described in the medium-term budget policy statement, is projected to fall short of the 2017 Budget estimate by R50.8bn, the largest under-collection since the 2009 recession. The shortfall can be reduced either through fiscal consolidation or by increasing taxes and cutting costs.

On November 24 Standard & Poor’s Global Ratings lowered South Africa’s rand debt to junk-status and cut the foreign-currency rating to two levels below investment gra