2020

Kicking the can down the road

Kicking the can down the road

In this edition of the Macro Review – ‘Kicking the can down the road’ we look at the 2020 Budget delivered by the Minister of Finance, Tito Mboweni on 26 February 2020.
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Key takeaways:

  • Budgeted revenue for 2020/21 is R1.58 trillion or 29.2% of gross domestic product (GDP), while budgeted expenditure is R1.95 trillion (36% of GDP).
  • The budget deficit is forecast at an estimate of 6.8% of GDP in 2020/21, 6.2% in 2021/22 and 5.7% in 2022/23.
  • Economic growth is expected at 0.9% in 2020, forecast to rise to 1.3% in 2021 and 1.6% in 2022.
  • Gross national debt is estimated to approach R3.56 trillion or 65.6% of GDP in 2020/21.
  • The Value Added Tax (VAT) remains unchanged and there is a marginal cut in Personal Income Tax (PIT), while ‘sin’ (alcohol, tobacco) and environmental (carbon, plastic) taxes are up.
  • The annual limit on contributions to tax-free savings accounts is up from R33 000 to R36 000.
Taxman at Your Door

Taxman at Your Door

This edition of the Macro Review looks at South Africa’s tax regime, incorporating data on government finances within the context of the country’s economy, the different forms of tax collection, as well as key sources of revenue.
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Key takeaways:

  • In 2018/19 total tax revenue amounted to R1.3 trillion — 26.2% of the country’s Gross Domestic Product (GDP) of R4.9 trillion.
  • Personal Income Tax (PIT), Corporate Income Tax (CIT) and Value-Added Tax (VAT) make up some 80% of national tax revenue.
  • Only 1.1 million or 16.6% of assessed individual taxpayers earn above R500 000, but contribute 67.6% to individual tax assessed. A mere 6 664 or 0.1% earn above R5 million, while paying 7.9% of individual tax assessed.
  • Companies with taxable income greater than R100 million amount to just 706 in number or 0.09% of companies assessed for tax, but account for 62.7% of corporate tax assessed.
  • For almost forty years, South Africa has been dogged by consistent budget deficits (expenditure outstripping revenue), which show no sign of letting up in the near future.