Growth is what SA needs - not more confiscatory taxation

It is expected that Finance Minister Nhlanhla Nene will be forced to increase the taxes paid by middle- to upper-income earners to raise an additional R44-billion in the next three years to plug our gaping budget deficit.

This is because raising VAT - which would affect the poor most - would cost the ANC at the polls, and increasing corporate taxes is a non-starter because of faltering economic growth.

But individual taxpayers have been squeezed hard in recent years. SA Revenue Service figures show that individuals paid 34.5% of the total tax revenue in 2013-2014; the portion contributed by companies was 19.9%.

Although he might elect to raise the marginal rate for high-income earners, it is likely that Nene will, like his predecessor, rely on bracket creep, which forces employees into higher tax brackets as a result of rising wages without compensating them for the effects of inflation.

But how much more can our already heavily taxed middle-income earners - who have in recent years been burdened by rocketing fuel, electricity and administered prices - take?

The other part of Nene's budget-balancing strategy - cutting government expenditure - can work only if the government can convince the public-sector unions to moderate their wage demands. He has budgeted for a 6.6% pay rise over the next three years for public servants; their opening gambit was 15%.

If comments this week by the National Education, Health and Allied Workers' Union, which dismissed the Treasury's ''unilateral'' announcements about the need for austerity, are anything to go by, more than a million public servants could be on strike in March.

Of course, another big strike, on the back of repeated electricity outages, will kill any chance of kick-starting real economic growth.

And here's the rub: the most sustainable way of raising revenue is to encourage the private sector to grow the economy, not to squeeze the hard-pressed middle classes.

Nene knows this: now all he has to do is convince his cabinet colleagues.