Budget 2017: An assessment, with emphasis on the

Transcript:Budget 2017: An assessment, with emphasis on the:
Budget 2017: An assessment, with emphasis on the fiscal framework and revenue proposals Mr Jugal Mahabir and Dr Seán Muller, Public and Environmental Economics Research Centre (PEERC), University of Johannesburg 1st March 2017 Critical questions for the Finance Committees Overall framework an appropriate balance between revenue, expenditure and borrowing adequate provision for spending on infrastructure development, overall capital spending and maintenance take into account all public revenue and expenditure, including extrabudgetary funds, and contingent liabilities Specific requirements of Money Bills Act (2009): fiscal framework Debt debt levels and interest costs are reasonable cost of recurrent spending is not deferred to future generations Economic context and impact take into account cyclical factors that may impact on the prevailing fiscal position consider short, medium and long term implications of the fiscal framework, division of revenue and national budget on the long-term growth potential of the economy and the development of the country REVENUE BILLS ensure that the total amount of revenue raised is consistent with the approved fiscal framework and the Division of Revenue Bill take into account the principles of equity, efficiency, certainty and ease of collection consider the impact of the proposed change on the composition of tax revenue with reference to the balance between direct and indirect taxes consider regional and international tax trends consider the impact on development, investment, employment and economic growth Specific requirements of Money Bills Act (2009): revenue Bills FISCAL FRAMEWORK Is fiscal consolidation appropriate in the current context? Should debt rise further so that expenditure can increase more rapidly than planned? Where does the responsibility lie for the revenue shortfall? Are we taking from the productive to the unproductive? Are contingent liabilities under control and not posing undue risk to the fiscus? We selectively address these as follows REVENUE PROPOSALS Are the revenue proposals equitable? Are criticisms of the new top tax bracket accurate? The composition of tax revenue is a concern, but are solutions as obvious as some claim? Public and Environmental Economics Research Centre (PEERC): Budget 2017 – Presentation to the Standing and Select Committees on Finance Support the gist of 2017 Budget, given circumstances Support government’s stance of fiscal consolidation in current context Despite consolidation, upward trend in debt An urgent need to reprioritize budget to ensure transformation and goals of the NDP Real austerity measures may become a reality? Tax proposals are defensible but a major concern over tax buoyancy