South Africa's Woolworths expects an announcement on personal tax hikes in next week's national budget, the retailer's chief executive said on Tuesday, a move that would mostly hit the pocket of its well-heeled shoppers.
Woolworths is a favourite among the highest earners in Africa's most advanced economy, many of whom were hit by an income tax increase last year.
Finance minister Pravin Gordhan, who needs to show fiscal control to avoid South Africa's sovereign debt rating being cut to below investment grade, has limited room to maneuver within a government that has vowed not to cut support to the poor.
Income tax increases would affect wealthier South Africans more and will gnaw at the disposable income of Woolworths' shoppers in a year that the central bank has already raised interest rates and slashed its growth forecast to below 1 percent.
Consumer confidence is at a 14-year low and business confidence languishing near two-decade lows. Woolworths last week gave shareholders a choice between scrip and a cash dividend as it aims to conserve cash.