Treasury Provides Responses to Submissions on 2017 MTBPS

National Treasury

The only sure way to escape from a debt trap is higher economic growth.

National treasury emphasised this during a briefing in parliament on responses to submissions on the 2017 Medium Term Budget Policy Statement.

Treasury’s deputy director general in the budget office, Michael Sachs, added that “modelling indicates that achieving and sustaining 3 percent growth would stabilise the debt-to-GDP ratio below 60 per cent.”

However, attaining the required growth rate cannot be achieved by borrowing more to stimulate demand.

The Presidential Fiscal Committee is considering proposals to stabilise the debt-to-GDP ratio over the medium term. Measures under consideration include narrowing the deficit, stimulating economic growth and building investor confidence.

Treasury also pointed out that tax under-collection may also suggest a “profound shift in the relationship between economic growth and tax collection in the years ahead.”

Meanwhile, treasury has announced the setting up of an inquiry into the South African Revenue Service.

In a statement, treasury indicated that the finance minister, Malusi Gigaba, had approached president Zuma for the “urgent establishment of an inquiry into the tax administration and governance of the South African Revenue Service (SARS).”

The president had agreed and a commission would be set up soon.

Part of the inquiry will focus on the factors responsible for the under-collection of tax by SARS.

In a separate matter, SARS has amended Schedule 4 to the Customs and Excise Act dealing with a rebate on motor cars.

Sabinet Cape Town Office