In the latest medium term budget speech in October 2016, Finance Minister, Pravin Gordhan tabled the financials and the latest spike in interest rates which could hurt the middle and lower class the hardest.
It is a proven statement that most consumers who are in debt are those of the middle and lower classes. Tax payers are to be indebted by R28bn in interest rates next year and over R43bn over the next two years despite the already high increase in taxes in February 2016.
The drop in revenue growth in the 2015/16 financial year will significantly reduce tax bases including salaries, imports and households. This meaning that everything will be more expensive and less accessible by our slow economic growth and harder for the average person and all this leads to higher interest rates meaning even more debt which will be harder to get out of. The slow economy makes it difficult to stabilise the debt to GDP ratio.
Although VAT (Value Added Tax) is the most efficient tax, it hits the poorer households the hardest as most consumers spend a large amount of their salaries on basic necessities.
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