Top 5 on Fin24: SARS to comply with tax inquiry, Zuma R50.8bn budget hole leaves SA in quandary

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Cape Town – A roundup of Monday’s top economic and finance reads on Fin24.

SARS to cooperate with Ramaphosa’s tax inquiry

The South African Revenue Service (SARS) said on Monday it will cooperate with an inquiry into its administration and governance, announced by President Cyril Ramaphosa on Friday. 

The tax authority was reacting to the president’s announcement of a commission of inquiry during the State of the Nation Address last week.

Ramaphosa said the commission, requested by the finance minister, would ensure that the credibility of SARS is restored, as well as its capacity to meet revenue targets.

“We must understand that tax morality is dependent on an implicit contract between taxpayers and government that state spending provides value for money and is free from corruption,” said Ramaphosa during his address.

Auditor deneral soon to get greater powers to fight wasteful spend

The auditor general should get “more teeth” to deal decisively with those wasting taxpayer money, said ANC chief whip Jackson Mthembu.

During the State of the Nation Address (SONA) debate at Parliament on Monday, Mthembu raised concern over the fruitless and wasteful expenditure of government departments.

“The R127.979bn in irregular expenditure uncovered by the auditor general for the years 2013/14 to 2016/17… could have funded free higher education for the poor,” said Mthembu. In 2016/17 irregular expenditure amounted to R45.6bn, according to the auditor general’s report.

Zuma budget hole leaves SA with tough decisions on tax

jacob zuma

South Africa may have a new finance minister soon, following the replacement of its president, but whoever replaces Malusi Gigaba will still face a R50.8bn hole in the nation’s finances.

With growth in SA lagging that of peers after a second recession in less than a decade, tax collections have dwindled. That’s intensified the difficulty faced by Gigaba at the National Treasury in striking the balance between finding more revenue and not choking off the country’s fragile recovery.

In October, his officials estimated public debt will exceed 60% of gross domestic product by 2022. The next month, the government pledged to cut spending by a further R25bn over the next three years to avert another downgrade of its rand debt to junk.

WATCH: Five things to look out for in a ‘tough’ budget

Budget 2018

The first budget of the Ramaphosa era is set to be delivered in Parliament on Wednesday, just five days after the State of the Nation Address and six days after the new president was sworn in. 

From tax hikes and plans for government debt, to loans for state owned enterprises and paying for free education, here is what South Africans will be watching out for on the day.

WATCH: Five things to look out for in a ‘tough’ budget

Rand still enjoying Ramaphosa rally

President Cyril Ramaphosa delivers his inaugural S

The rand is still enjoying the so-called Ramaphosa rally, but may encounter some near-term weakness ahead of the Budget Speech on Wednesday, according to market analysts. 

The local currency was trading at R11.66 to the dollar on Monday at 11:00, after opening at R11.58 to the greenback. 

Last week it strengthened from just under R12/$ to an intraweek high of R11.56, on positive sentiment around the swearing in of South Africa’s new president as well as relative dollar weakness.

Visit our Budget 2018 Special for all the news, views and analysis.

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