Clearly if the growth projections are met and government expenditure remains constant, or decreases, increased future taxation would be avoidable.
From a tax perspective the following salient facts are important:
‘total tax revenue is expected to be some R70 billion less than the February 09 budget projection. this is made up from Income tax paid by companies will be R21 billion less than anticipated in the February budget, because of lower earnings VAT receipts will be R31 billion lower, because of reduced consumption Customs and excise duties will be R9 billion lower, due to the decline in imports.’
and then: ‘Consolidated government expenditure, on the other hand, will rise from R715 billion last year to an estimated R841 billion this year, or some 35 percent of gross domestic product.
In comparison with last year, expenditure is projected to increase by R127 billion, while revenue declines by R34 billion.
The net result is a widening borrowing requirement:
The consolidated budget deficit will amount to R184 billion in 2009/10, or 7.6 percent of GDP.
Taken together with the financing requirements of Eskom, other state-owned enterprises and municipalities, the overall public sector borrowing requirement this fiscal year will amount to R285 billion.
Later on in the same speech the honorable minister discusses the future: ‘
Against the background of the global economic decline, the outlook for the South African economy is significantly weaker than projected in February.
Real GDP is expected to be 1.9 per cent lower this year than in 2008, and growth of 1.5 per cent is projected for 2010, rising to 2.7 percent in 2011 and 3.2 per cent in 2012′
The full Speech by Minister of Finance, Mr Pravin Gordhan during the Mid Term Budget Policy for 2009 is available on the media website here: Mid Term Budget Policy for 2009