Budget 2020 in a nutshell | No major tax changes and ambitious proposal to cut state wage bill
A proposal to cut the state’s wage bill by R160.2 billion over three years as Treasury warns of ever-rising debt repayment costs was one of the key announcements in the 2020 Budget.
“For the credibility of our fiscal stance, that R160 billion or so needs to be found,” Mboweni told journalists at a pre-Budget briefing.
The proposal will anger unions which have warned against wage cuts.
Mboweni presented the Budget in an environment of low economic growth, a rising budget deficit and record-high unemployment.
“We won’t get everything that we need,” he told reporters, saying SA was in a difficult fiscal position.
“[But] we are not at a point of austerity, we are at a point of cleaning up our house,” he said.
There will be no major tax increases apart from annual hikes in fuel and Road Accident Fund levies. Treasury said new tax increases could “harm the economy’s ability to recover”.
Despite speculation by some pundits, VAT will not increase.
“In this difficult economic situation, it would be foolhardy to introduce a [VAT] hike,” said Mboweni.
Taxpayers will get a measure of relief from above-inflation adjustments in personal income tax brackets, while Treasury says it also intends to lower the corporate tax rate to make SA more competitive.
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