- Old Mutual has warned South Africans that next week's Budget Speech could hold unpleasant news
- Suspicion is rife that a once-off tax levy on personal income and a VAT hike might be on the cards
- This comes as the government is forced to spend R200 billion annually just on loan interest
Old Mutual has warned that taxpayers could be facing a once-off tax levy on personal income coupled with a VAT hike.
BusinessLIVE reports that the government's debt burden is 'spiralling out of control' with a R200 billion yearly interest burden.
In an attempt to bring in more cash, expectations are that sin tax and fuel tax hikes will be introduced.
Old Mutual Investment Group's chief economist Johann Els predicts that an additional tax on income will come alongside a VAT hike in an attempt to ward off the debt burden:
“We pay more than R200 billion a year on interest payments alone – which is more than the annual budgets of health, education and police services."
This is expected to be similar to the once-off 'transition levy' taxpayers had to pay back in 1995.
Momentum Investments economist Sanisha Packirisamy feels there is minimal chances of a hike in company tax:
“SA’s relatively high corporate income tax rate (28% in SA compared to a global average of 24.2%) and government’s desire to draw foreign direct investment towards the country suggest little scope to raise corporate income rates further."
Finance Minister Tito Mboweni is set to deliver his Budget Speech next week.
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