Reducing South Africa’s tax base poses serious risk to growth: business group


South Africa should prioritize reforms that promote economic growth in order to broaden its tax base, create private sector jobs that reduce reliance on social assistance and ease pressure on public finances, a local trade group said.

A business confidence index compiled by the South African Chamber of Commerce and Industry fell to 94 in March from 94.3 the previous month, according to a statement sent on Wednesday.

While the index average has improved by 13.2 points in the six months to March, compared to the previous six months, it is important for the authorities to tackle “political certainty, the structural hurdles and low investment ratings that still prevent the economy from breaking into the present. dead end, ”Sacci said.

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The virus restrictions have caused less disruption since the second quarter of 2020, but they have left some sectors in need of “cutting edge economic policy formulation,” he said.

Africa’s most industrialized economy contracted the most in a century last year after lockdown measures to limit the spread of the coronavirus halted some activities for months, leading to business closures and an increase in unemployment.

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The government only expects production to return to pre-pandemic levels in 2023.

While Finance Minister Tito Mboweni in February reduced the expected peak of public debt to 88.9% of gross domestic product in fiscal year 2026, against a previous forecast of 95.3%, the group of companies reported high debt levels, high debt service costs on service delivery and social protection expenditures, and a relatively narrow tax base as risks.

Economic growth is the “ultimate solution” to broaden the taxpayer base and create the jobs necessary for a meaningful recovery, he said.

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The deployment of Covid-19 vaccines in South Africa, the country most affected by the virus on the continent, “should play an important positive role in reviving the economy, with more space to recalibrate government management, but also to refocus the private sector and local and foreign investors to invest in an economy with inherent potential, ”said Sacci.

“Investor confidence remains a key element in eliminating economic ills.”

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