South African Revenue Service (SARS) Commissioner, Edward Kieswetter, has welcomed initiatives by government to increase employment in South Africa.
Finance Minister Tito Mboweni has tabled the Medium Term Budget Policy Statement in which he announced the allocation of over R12-billion towards employment initiatives.
Mboweni also said government had to act now to avoid a sovereign debt crisis. Spending is going up, while less revenue is coming in. Revenue has been revised down by R8,7 billion for the current financial year.
Kieswetter has expressed concern over dwindling revenue collection and compliance as this is a key aspect in enabling government to implement strategies to revive the economy.
“To ensure the fiscal framework remains within the levels that he is planning we would have to find an additional 40-billion in taxes. We know that compliance levels have declined progressively, the employment base is significantly smaller and therefore growing the employment base is an important part of expanding the tax base.”
On Wednesday, Mboweni revised this year’s growth contraction to 7.8% from the 7.2% estimate in June. He said government will propose a five-year fiscal consolidation plan to support the economy and create jobs.
“We table a five-year fiscal consolidation pathway that promotes economic growth while bringing debt under control. The fiscal measures realign the composition of our spending from consumption towards investment and support efforts to lower the cost of capital. Our revised fiscal framework puts us on a course to stabilise the ratio of debt to-GDP at around 95% within the next five years. The stock of gross debt will rise from roughly R4 trillion this year to R5.5 trillion in 2023/24.”
Economic growth is now expected to recover in 2021 at 3.3%.
Minister Tito Mboweni tables the Medium-Term Budget Policy Statement: