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According to a PWC report entitled “South Africa’s economic outlook What can Budget 2021 do to help?” businesses and consumers will be hoping for some clarity regarding the following seven points.
The tourism industry has been hit hard by locked borders to stop the spread of Covid-19, the third ban on alcohol sales, beach closures and curfews that restricted public life. The industry believes that the answer to its recovery is the expedited roll-out of Covid-19 vaccines.
The fiscal situation is ‘less horrible now, but in the end our budget deficit is probably going to be a little bit smaller’ – Wikus Furstenberg from Futuregrowth Asset Management.
iAfrica Photographer: Waldo Swiegers/Bloomberg
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In 2020 there was a glimmer of hope as we saw no major tax increases to personal income tax (PIT) and no changes to the corporate or value-added tax (VAT) rate. Instead, the focus shifted to reducing government spending, which included reducing the public wage bill by roughly R160 billion over three years. It appeared as if government conceded that taxing an already-concentrated and shrinking tax base would not deliver superior revenue income. The success of the 2020 Budget was therefore solely reliant on the assumption that the wage bill could be reduced. But little did we know that a pandemic was approaching, with devasting consequences for an already-fragile economy.