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'Taxes are squeezing the middle class'

NO LAUGHING MATTER: Being in debt is an oppressive, counterproductive state of being photo: thinkstock
NO LAUGHING MATTER: Being in debt is an oppressive, counterproductive state of being photo: thinkstock

Finance Minister Pravin Gordhan's Medium-Term Budget was warmly received by some economists and political analysts, who described it as "calm and measured".

But one of the economists raised concerns about the raising of taxes and poor implementation of government programmes and the government's high wage bill.

Significant tax increases are in the pipeline next year as the Treasury grapples with sluggish economic growth, student demands for free education and lower revenue collection.

"I think we are getting close to a situation where we will not meet any target. We have a downward growth forecast. Secondly, the country's debt to GDP (ratio) ... they said four years ago that it won't exceed 38%. It's now sitting at 48%," said economist Mike Schussler.

He said SA needed to take a "re-look at itself". "Every time we get to this place, we get tax increases and the middle and top are getting squeezed. They are not getting back what they should be getting back."

Schussler said a majority of people have become "punch drunk" with all the tax. " We've had almost R43-billion in tax increases."

Political analyst and public law associate professor at the University of Cape Town, Richard Calland, said Gordhan was well received from across the board.

"It was interesting at the end, the virtually whole of the horse shoe rose to their feet to applaud him. This demonstrates he's got cross-party support who understand his predicament. They respect him. The ANC were warm towards him. Not overwhelmingly so but they were warm," said Calland.

Gordhan could not have asked for a better reception in parliament when he received a rare standing ovation from opposition MPs and the public. "He also went out of his way, importantly, to the student movement [#FeesMustFall protesters] to tell them that he's listening ... that indicates that he's taken a strong leadership position in this government."

Calland said the speech was what he expected and what the country needed. "It was calm, measured, it was confident, it revealed the fiscal constraints that the country faces," he said.

Cosatu's Matthew Parks said while they welcomed many of the positive aspects of the speech, they did "see it [as] being sufficient to stimulate economic growth" but questioned how it would solve the country's 36% perennial unemployment crisis.

DA's David Maynier said: "The Medium-Term Budget policy statement was a major blow for the 8.9 million people who do not have jobs, or have given up looking for jobs, and do not have hope in South Africa."

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