The Finance Minister was able to avoid tax rate increases, and
even make a positive contribution to reducing the deficit, as a
result of better than expected tax revenues. These were largely
contributed by the mining sector due to the increase in commodity
prices, strong consumer demand after the COVID-19 lockdowns
contributing to VAT and corporate taxes, and better personal tax
collections due to improved earnings.
The Finance Minister referred to reducing the corporate tax rate
in future, and the disbenefits of further rate increases
generally.
He also cautioned that unless GDP and tax revenue increased,
there was no capacity for increased permanent state
expenditure.
He warned about risks to the fiscal outlook both in the global
and the domestic environment, including increased borrowing costs,
state wage bill, and the poor state of certain SOEs.
