APA-Pretoria (South Africa) South Africa’s economy did not perform well as expected in the past financial year due to a shortfall of $2.95 billion in tax revenue, Finance Minister Finance Minister Enoch Godongwana has told parliament.
Addressing Parliament during his budget statement on Wednesday, Godongwana said the country collected US$91.1bn as tax revenue for 2023/24, which is $2.95bn lower than budgeted for.
This was largely due to the decline in corporate profits and revenue from taxes on mining whose products fetched low prices on the market, the minister said.
“Simply put, if the rand strengthens against the US dollar and other reserve currencies, the account balance declines and vice-versa,” the minister said.
He added: “The account balance has grown to over $26.3bn over the years because the rand has depreciated over time.”
Due to this low tax collection, he said the country would tap its reserve account managed by the South African Reserve Bank to pay for its debt which stands at $18.73bn.
“We will draw down $7.89bn of the reserve balance once we have ensured that sufficient buffers are available to absorb exchange rate swings and the solvency of the Reserve Bank is not compromised,” Godongwana said.
As a medium-term measure to cater for the deficit, the minister said he would raise taxes on alcohol and tobacco products and related paraphernalia, he added.
NM/jn/APA