Significant tax increase looming: Roodt

The National Budget Speech will be presented against the backdrop of sluggish economic growth, the looming threat of a possible negative view by independent rating agencies, the fees must fall campaign as well as uncertainty in the global economic conditions.

All these factors are placing pressure on Gordhan to try and balance the various competing priorities.

Chief Economist at Efficient Group, Dawie Roodt sat down with JacarandaFM News on what we can expect from the finance minister this year.

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Roodt says this specific budget is going to be exceptionally important, because of the possibility that South Africa's credit rating could be downgraded.

"If you analyse the numbers, it's quite clear what has been happening the last couple of years - the size of the state simply ran amok and we have a massive civil service in South Africa who are hopelessly overpaid," says Roodt.

Roodt says the country's spends a lot of money on unnecessary things.

"This includes bailing out the parastatals, like South African Airways (SAA) and Eskom and we also had to build one or two homesteads as well," says Roodt.

Roodt says SA owes too much money and believes this could lead to significant tax increases in this budget.

"My suspicion is that we are going to see an increase in personal income tax. I don't think there will be an increase in VAT, it's politically too dangerous. I do think something like the fuel levy will be increased by quite a large margin as well as the sin taxes," says Roodt. 

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Roodt says he also expects an increase in wealth taxes - like Capital Gains Tax (CGT) and estate duties - as well as the Sugar Tax.

He says the answer isn't more tax, but rather a smaller state.

"The first thing we should be doing is to cut back on the size of state," says Roodt.