As we stumble towards the festive season, it might be as well to ponder the old, cynical saying: “Eat, drink and be merry – for tomorrow, we die.”
In South Africa, while we indulge ourselves as much as our battered wallets allow over the end-of-year festivities; we may not exactly be going to die, but next year might make us wish we had…
Even before new year, we can expect large increases in fuel prices, which will have a knock-on effect on the costs of everything else we buy, but there is worse news on the horizon for early 2018.
Reports this week said that President Jacob Zuma has ordered Minister of Finance Malusi Gigaba to further increase taxes, as well as cutting government expenditure, in an effort to stabilise public debt below 60% of GDP.
Gigaba revealed recently, in his medium-term budget policy speech, that there is a predicted R50 billion shortfall in revenue for the 2017 budget.
This money will have to be recouped, somehow, in the 2018 budget, which Gigaba will deliver in February next year.
Zuma has reportedly ordered Gigaba to increase tax revenues by R15 billion and to cut official spending by a further R25 billion.
When it comes to taxes, it will probably be the long-suffering five million individual taxpayers who are asked to cough up more… perhaps in the form of a one-off levy or a slight increase in the marginal tax rate.
This is because major tax reforms, including an increase in VAT, are unlikely to be implemented by the ANC, because they may have a negative impact on the party in the 2019 elections.
It seems likely that more financial ratings downgrades are on the way, especially if the ANC’s elective conference goes badly in December.
That will have ripple effects across the economy.
Right … where’s that drink?