National Treasury could be on track to have a better fiscal cushion for the 2020/21 budget than it initially projected. It anticipated that the tax shortfall would be as much as R300 billion in the Medium-Term Budget Policy Statement in November 2020. But in a research note released on Monday, HSBC Global Research says the shortfall does not look like it will be as high as first thought, as gross tax collection in November was up 3%, measured year-on-year.
It anticipated that the tax shortfall would be as much as R300 billion in the Medium-Term Budget Policy Statement in November 2020. But in a research note released on Monday, HSBC now expects the tax shortfall to be R251 billion and the deficit to be 13.5% of GDP, as compared with a deficit of 15.7% projected in the MTBPS.The rise in revenue coming from personal and corporate income taxes and taxes on international transactions was more muted.
Though the reduction in the tax shortfall is good news, HSBC notes that there was a 0.8% contraction in economic activity in November, when measured month-on-month.