You are going to pay for the corruption at Eskom, SAA, SABC

South Africans should brace themselves for higher taxes next year as the impact of state capture, corruption, and mismanagement are starting to bite.

The National Treasury delivered its 2019 medium-term budget policy statement today, revealing that revenue collection fell far short of estimates.

Compared with the 2019 Budget estimates, total revenue shortfall for 2019/20 will amount to R52.5 billion.

This reflects a poor employment outlook, with job losses, lower wage settlements and smaller bonuses, reducing personal income tax collection.

There was also reduced profitability in a difficult trading environment, resulting in lower-than-expected corporate income tax collections.

Financial pressure on consumers resulted in weak household consumption which means domestic VAT collection was not as high as expected.

Tax increases planned

The Treasury said significant tax increases over the past several years leave only moderate scope to boost tax revenue.

However, given the size of the revenue shortfall, additional tax measures are under consideration for next year.

Chris Axelson, chief director for economic tax analysis in the Treasury, said that given the fiscal position South Africa finds itself in, all tax options need to be on the table.

“The 2019 Budget included R10 billion in tax increases for 2020/21. The tax policy measures to raise this amount will be announced in the 2020 Budget,” the Treasury said.

Taxpayers already overburdened

While the government wants to collect more money through higher taxes, the inverse may happen instead.

Efficient Group founder and chief economist Dawie Roodt said South African taxpayers are already overburdened.

This means that even when the government increases taxes further, they will not increase tax collection much.

It will also further frighten the existing taxpayers in the country, who are already faced with the highest taxes in history.

The consequences of ever-increasing taxes and mismanagement from the government include a potential tax revolt and skilled individuals and companies leaving the country.

The fact that South Africans are tired of paying for corruption and mismanagement at state-owned enterprises (Eskom, SAA, and the SABC), municipalities, and state departments only aggravates the situation.

Now read: How to destroy a country – The South African story

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You are going to pay for the corruption at Eskom, SAA, SABC