Economic think tank, the Institute for Economic Justice , says the government should increase taxes, borrow more money, and consider implementing a wealth tax instead of cutting government spending.
But in a report issued ahead of the Minister of Finance’s budget policy statement on 1 November, the IEJ said the shortfall isn’t “extraordinarily large”, and there are ways to fix it without “chaotic budget cuts”, which could hit the wider economy hard. “Mostly, the slower tax collections are the result of a slump in mining, which has contributed a bigger and bigger chunk of corporate taxes in the last few years. Taxes paid by firms in other sectors and income tax paid by individuals have been in line with expectations,” they said.
“If this overspend is a ‘crisis’, then it is one entirely of the National Treasury’s own making,” the economists said.
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