South African consumers got some sort of relief the day after the mini-budget, when deputy finance minister David Masondo said the government did not intend to increase taxes over the next few years.
In the mini-budget, the national treasury committed to target a primary budget surplus for the next 10 years. A primary surplus means that government revenue exceeds expenditure before debt repayments, which have become the single biggest component of government spending.
Masondo made it clear that the government did not intend to raise taxes to achieve the primary surplus, Moneyweb reported.
“We’re not interested in that. There’s a limit to how much you can increase tax,” Masondo noted,
“Our policy position is to grow the economy and broaden the [tax] base, not seeking to get a [primary] surplus through increasing taxes. That’s not what we want to do,” he said.
That assurance means value added tax (VAT) should not increase next year. A VAT hike would make food more expensive for cash-strapped consumers and put essential foods out of the reach of low-income households.
Image: Treasury officials, including Finance Minister Godongwana, and Deputy Minister Masondo, arrive for the MTBPS. @ParliamentofRSA
