Clothing stores would feel the squeeze most as consumers reduce spending
Finance minister Tito Mboweni. Picture: GETTY IMAGES/ BLOOMBERG/GEM ATKINSON
Economists see an outside chance that Mboweni will increase the valued-added tax rate, with such a move predicted by five out of 19 surveyed by Bloomberg.The blow from a higher VAT rate would be felt more by clothing retailers than by food stores as consumers adjust, said Henre Herselman, a derivatives trader at Anchor Private Clients.
Higher taxes would translate to lower disposable income, which would filter through to stocks, said Casparus Treurnicht, a money manager at Gryphon Asset Management. If this happens, “expect depressed valuation levels for longer”.
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