SA safe from credit downgrade, but little tax relief
South Africa's credit rating is unlikely to suffer another downgrade following yesterday's budget speech.
That's according to economist, Mike Schussler.
"The rating agencies may not downgrade us but we have always tried to aim for the 3% mark and failing to do so - now we are aiming to have 3,5% budget deficit in three years time. If we miss the 3,5% - we will have a problem. We are now starting on a new leaf but we have a very big tax burden," he says.
Schussler says the increase in VAT to 15%, no personal tax relief and higher sin taxes are the obvious talking points.
"Everybody is going to feel the VAT increase, and the fuel levy increases. Education becoming free for many is certainly a good thing," Schussler says.
He believes government must focus on reducing expenditure rather than collecting revenue.
"A country such as South Africa can only grow if it has an efficient government. That is something we don't have at the moment," he adds.