Minister Pravin Gordhan's Budget speech will likely focus on spending, says KPMG's Cuma Limekaya

Labour and job creation

Labour will be hoping to see an increase in minimum wage at a rate significantly higher than inflation. We expect an increase but not significantly higher.

Gordhan's 2010 budget speech highlighted an undertaking to create employment. To this end, we can expect to see targeted measures to promote job creation – especially amongst the youth.

Social grants

People in the lower income groups will be hoping for an increase in their social grant. There's been quite rapid food inflation in the past two quarters so their real purchasing power has diminished from last year and we expect that Gordhan  will increase this marginally as he has done in the past.

Revenue sources / tax base

Salaried individuals will be hoping for tax cuts and reprieves as consumers continue to struggle with high debt levels coupled with increased lending rates. Realistically speaking however, Government is going to need extra revenue to fund its planned expenditure – this will most likely be generated by additional and higher taxes.

The question is:  Will tax increases happen before the tax review is finished in a year or two?

The market is eagerly waiting to learn what Gordhan will propose in this budget speech to generate the revenue that South Africa so desperately needs.

This article first appeared in Drum, 25 February 2014

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