IT IS no secret that South Africa has serious economic challenges, and chief among these is that the government is struggling to stabilise public debt, says deputy finance minister David Masondo.
Speaking at an event on Thursday (6 May), Masondo said that this problem emerged before the Covid-19 pandemic, and has grown from the structural gap between tax revenues and the government’s spending commitments.
“One of the strategies government tried to close the gap between spending and revenue, was to try to increase taxes, which even included raising VAT.
“But, as we have argued in the budget review, this has not really worked because economic growth has continued to fall, which has meant that tax revenues kept coming in lower than we expected,” he said.
Masondo said that Treasury is now worried that raising taxes could even contribute to the country’s growth slowdown – which is why this year’s
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