Tax collection better than forecast‚ but low growth constrains government spending: Gordhan
04 April 2016
Posted by: Author: Times Live
Author: Times Live
South Africa’s government has to be tough on mismanagement of funds‚ amid low economic growth and investor uncertainty‚ Finance Minister Pravin Gordhan said on Friday.
Releasing government’s preliminary revenue outcome numbers‚ he said between the 2015 and 2016 budgets‚ projected tax revenue for 2015/16 was revised down by R12 billion.
However‚ tax revenues have been marginally more resilient than government had anticipated‚ he said‚ announcing that gross tax revenue for the fiscal year came in at R1 069.9 billion or R0.2 billion more than the February estimate.
"This is a remarkable achievement that we attribute to the hard work and dedication of 14‚500 staff complement of SARS (South African Revenue Service).”
Falling economic growth has been dragging down tax revenues: Over the past few years‚ National Treasury has consistently had to revise down projected tax revenue‚ in line with weaker economic growth.
Despite maintaining an expenditure ceiling over the past four years‚ the shortfall in taxes has produced a persistently large budget deficit.
"While the latest budget puts in place tough measures to close the budget deficit‚ our long-term fiscal sustainability will ultimately depend on higher economic growth‚” Gordhan said.
Initial indications are that the revised deficit as published in the 2016 Budget Review is broadly achievable‚ the minister said.
But‚ he noted‚ "It is clear that the global economy is not going to be helpful over the next few years. We need to redouble our efforts to increase policy certainty‚ catalyse entrepreneurship‚ innovation and the joint experience of the private sector and the public sector so we can grow this economy.”
"Notwithstanding today’s revenue outcome‚ the growth expectation of 0.9 per cent for 2016 is not nearly enough to generate the kind of revenue that enables us to fund all of government’s programmes. Our focus on fiscal commitment should remain.
"We cannot spend money we do not have. We cannot borrow beyond our ability to repay.
"Until we can ignite growth and generate more revenue‚ we have to be tough on ourselves. We need to inculcate a culture of efficiency in our approach to spending. We will do everything possible to cut wastage‚ control expenditure‚ seek value-for-money and combat corruption where it is found.”
Gordhan also commented that the uncertain world outlook requires South Africa to take ownership and speedily deal with domestic constraints to economic performance.
"Our young economy requires significant investment – in human and physical capital. But high levels of uncertainty around the economic outlook – both at home and abroad – require that we remain united and focused on tackling our socio-economic challenges.
We must demonstrate to investors and the people of South Africa that we are undertaking the concrete actions required to map a path for higher economic growth and progress on addressing poverty‚ unemployment and inequality‚ as we seek to preserve our investment grade rating. We need to be frank about what is working and what is not.”
This article first appeared on timeslive.co.za.