Mini Budget Doesn’t Impress

Mini Budget Doesn’t Impress

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Commenting on Finance minister Pravin Gordhan’s mini budget, Neren Rau, South African Chamber of Commerce and Industry (SACCI) CEO said Gordhan gave few details on planned changes to fiscal policies, and where details were given it was on peripheral matters like austerity measures for senior government officials.

Rau added, “Despite this, minister Gordhan can be commended for his emphasis on pragmatic economic policy and priorities, on the NDP and investment, and on the fact that a growing economy is critical to government activities.”

SACCI welcomed comments about South Africa’s credit rating and government debt  and planned measures to address both . Rau said, “Much work still needs to be done to present South Africa as an investor-friendly destination.”

Referring to the announced austerity measures for senior government officials, Rau commented, “SACCI appreciates the specific measures in the MTBPS aimed at drastically curbing wasteful expenditure by senior government officials.

“This is definitely a step in the right direction and follows the lengthy public outcry over wasteful expenditure by senior government officials. This austerity trend will hopefully extend beyond office policies and also be reflected in fiscal policy as a whole.

Rau said he would have liked to hear more on the following:

Carbon tax

“In its present form, the proposed Carbon Tax will lead to massive job losses and further entrench South Africa’s de-industrialisation trend. I would’ve liked to have seen an admission of the uncertainty inherent in the current carbon tax proposal and a concession to delay the 2015 implementation to allow for thorough engagement with all the role-players.”

 

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Public sector wage bill

The additional R2.3 billion allocated to national and provincial government merely to cover inflation-related salary increases is a clear indication that the public sector wage bill is becoming unsustainable.

“SACCI would’ve liked to see specific plans on how the National Treasury will reverse this ever-growing burden on the private sector.”

Employment tax incentive

“SACCI welcomes the Employment Tax Incentive in principle but the proposal in its present form severely limits the application of the incentive to Special Economic Zones and specific industries which effectively curtails the beneficial impact of the incentive.

“The fact that the Bill will go to Parliament within less than a month after the deadline for public comments has called into question the extent to which such comments were taken into account.”

SME tax regime

While SACCI is excited about the forthcoming report by the Tax Committee, it is disappointed that no details have been given on their progress during the MTBPS.

“This would’ve been the ideal opportunity for the minister to share some of the tentative policy proposals that the committee is working on. We remain optimistic that the easing of the tax administration burden on SMEs will be addressed in the February 2014 Budget Speech.”

Rau concluded, “SACCI is hopeful that the general message of the MTBPS on productive investment, saving and securing a flourishing economy will manifest in tangible policies in the short to medium term.

“However, the current business and general economic condition are harsh and the business community requires clarity on how government will improve its own value proposition beyond merely curbing the expenses of senior officials.”

 

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