Budget reactions: Nene fails to surprise
IOL Business - Oct 22nd 2015, 09:14
* The continued delinquency within Parliament threatens the institutionalism of a critical democratic institution.
Protests on the perimeter of Parliament warrant attention, it represents a social expression of a broader financial strain that South Africa has experienced as a function of lingering weak growth, high unemployment and under employment as well as slow movement in the repair of South Africa’s historical racial imbalances. – Goolam Ballim, Standard Bank chief economist
* There is nothing in the statement that showed that the Treasury have its antennae on the ground to pick up the edginess of the population and the dying pulse of the country’s economy. They missed an opportunity to bring about radical policy interventions to stimulate the economy and make a dent in the persistent unemployment, deepening poverty, and growing inequality.
While we are sympathetic to the difficult balancing act forced on our government by this precarious economic climate, we however do not believe that now is the time to reduce state expenditure. We agree that wasteful and unproductive expenditure must be reduced but the economy demands that we increase state expenditure and government investments to grow infrastructure, support vulnerable industries, and create decent permanent work for all. Therefore, we welcome the government’s commitment not to reduce socio-economic expenditure and to approach the possibility of any tax increases with caution. – Cosatu national spokesperson Sizwe Pamla
* No surprises whatsoever. Today’s mini budget was a reality check. The finance minister made a strong appeal for the government, the unions, business, and civil society to work together. Very heartfelt appeal to work together.
* The revision to the tax collections was as expected. The reduction in the growth forecast for this year was totally expected. It is logical that government debt will increase if you have falling tax revenue and sluggish growth so you then need to borrow to invest. I expect that at the 2016 Budget speech, there will be an increase in taxes but I’m not sure where the increase in taxes will come from. The word tax was used repeatedly in the mini budget. The anarchy outside parliament may not impress foreign investors. – Nazrien Kader, the head of Deloitte Tax Africa
* There was no surprise that tax collections were revised down especially in light of the lower growth figures this year. It is interesting to see that the government is looking to increase the tax base by bringing more people into the tax net. The finance minister said he was seeking advice about the wealth tax. In our view, South Africa already has wealth taxes in the form of capital gains tax, donations tax and estate duty. The 2016 Budget could see capital gains tax and estate duty strengthened. However, the minister is unlikely to introduce new taxes in the 2016 Budget. It was also announced that the carbon tax bill would be released later this month. The carbon tax law has been postponed several times and I would expect it to come into force in the 2016/17 tax year. – Alex Gwala, a Deloitte mining tax specialist
* The rand is at about R13.50 to the dollar, which indicates that investors are taking this quite seriously. This incident shows investors the social disturbances that can occur in South Africa from the continuing of inequality. The logic of this is that if there is disruption to the instructions of universities, there will be continued impairment of skills shortages, it will heighten inequality and lead to greater social unrest. The markets are considering this in terms of driving the rand downward. – Azar Jammine, economist and director at Econometrix
* Given the dramatic start at the beginning of the medium-term budget policy statement, I must admit that it is quite concerning to see nothing much at all about the students and fees issue in today’s speech. Sadly, there only seems to be a paragraph dedicated to the issue of education and fees and I just don’t think that this is going to be sufficient. This is disappointing and very concerning. – Eugene du Plessis, a partner and head of tax, Grant Thornton, Johannesburg
* The SA Chamber of Commerce and Industry (Sacci) liked the following: the recognition that the energy constraints being experienced and the structural weaknesses add to the negative impact on economic growth that the global slowdown has on the country; the acknowledgement that the country’s education and training capacity needs to be strengthened and levels of investment need to be increased; a focus on the needs of small business specifically regarding taxation and the allocation of R24bn for enterprise development and the implementation of socio-economic impact assessments in identifying unintended con sequences in legislation, regulation and policy. This is something that Sacci has long called for: the introduction of a legislative framework to regulate state-owned enterprises to address their governance issues. Sacci trusts that this will reduce the need for the substantial bailouts that some have been receiving over a number of years. – Vusi Khumalo, Sacci president
* The retirement industry is currently preparing responses to the draft default legislation issued by National Treasury earlier this year, with comments due by end of October. The principles embodied in these draft proposals have the potential to enhance retirement savings and hence the benefits that people receive. It was pleasing to see the minister refer to these imperatives of ensuring people preserve their savings when they change jobs and that they then use those accumulated savings to provide a sustainable income in retirement. It was also encouraging to see that the Department of Social Security is working on “social security reform proposals (that are) at an advanced stage” to accompany retirement reform as both of these elements are necessary in order to provide comprehensive protection for individuals. – Andrew Davison, the head of investment consulting at Old Mutual Corporate Consultants From © Independent On-line 2015. All rights reserved.
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