Finance Minister Pravin Gordhan is expected to address the country’s chronic joblessness and its effect on the tax base in his budget speech this afternoon. Economists say Gordhan will also try to re-assure investors that he is committed to prudent spending, following downgrades from three international rating agencies. The Treasury has seen its tax base shrink as the economy loses jobs while the government’s social welfare programme, which gives out grants to 16 million people, has been a drag on state coffers. Economists say mining royalties are likely to be the main focus of the review, and that the minister may increase personal income taxes and value added tax, which has been capped at 14. The market also wants clarity from Gordhan on a 3-year-old plan in which the government would subsidise wages for new entrants to the job market.
The Congress of South African trade Unions has rejected the plan, saying employers could use it to push out long-serving employees while exploiting new workers.
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