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Gordhan’s mammoth task

Monday, 08 February 2016   (0 Comments)
Posted by: Author: Ingé Lamprecht
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Author: Ingé Lamprecht (Moneyweb)

Convincing taxpayers that government is running a tight ship.

Finance minister Pravin Gordhan will have a mammoth task on his shoulders when he takes to the podium to deliver his first Budget Speech of his new term: Convincing taxpayers that government is committed to running a tight ship and using their money in an transparent, efficient and accountable manner.

This comes against the background of a deteriorating economic environment and expectations that tax hikes will be an inevitable outcome on February 24.

The World Bank on Tuesday revised South Africa’s economic growth expectations for 2016 to 0.8% from a previous 1.4%. This is in line with a prediction of the International Monetary Fund (IMF), which lowered its GDP forecast for the year to 0.7% from 1.3% in October.

The deteriorating economic and rising inflation outlook will put pressure on government to find additional revenue sources and to curb spending, especially as rating agencies keep a watchful eye on the country’s fiscal position.

Charl Niemand, head of indirect tax at SizweNtsalubaGobodo, says if there was a good story to be told around government spending and transparency, there would be less resistance to proposals to hike taxes like VAT for example.

He says the political opposition towards an economic reality has now grown into an economic resistance as well. The private sector and global investors are calling for government to be held accountable.

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