Economists are urging government to focus heavily on job creation in order to grow the economy.
This after Finance Minister, Tito Mboweni, delivered his maiden budget speech on Wednesday in the National Assembly.
There will be no increases in income tax rates and the VAT rate will remain unchanged but the tax-free threshold for personal income taxes has been upped from R78 000 to R79 000.
Speaking on Morning Live, tax expert Billy Joubert, says the country’s tax-base can only grow effectively if there is a decrease in the unemployment rate.
He says; “What we’ve got is the tax bracket staying the same and that has an increased effect due to a phenomenon called fiscal drag, in other words we are not adjusting the brackets to keep up with inflation. Far more of our revenue comes from tax on individuals.”
“The second biggest contributor is VAT. So I think corporate income tax is only the third biggest. So if we want to grow our tax base quickly, what we need to do is get people in employment because they are the ones that contribute the most. What we’ve currently got is a phenomenon where a small number of people contribute a big chunk of the tax revenue. So if we can get people in employment, that will help us a lot.”
Full Interview below
