Many had hoped for robust measures to alleviate the strain inflicted by economic uncertainties and global challenges. Photographer Ayanda Ndamane, Independent Newspapers.
The build-up to Finance Minister Enoch Godongwana’s budget speech on 21 February 2024 created significant hype across the country, but the contents left many with unmet expectations.
This was the general sentiment at a panel discussion at the SAIPA Budget Connect gathering, aimed at unpacking the impact of this year’s budget announcements.
Etienne Retief, Chairperson of SAIPA Centre of Tax Excellence and panel facilitator, noted that there was no real theme to this budget, unlike previous years, and a noticeable reservation by the state to delve into important topics, likely as a result of it being an election year.
Back to business
Following widespread distress among businesses in recent years, the question was raised around what the state was doing to assist large enterprises and SMEs alike, to get back on their feet.
Many had hoped for robust measures to alleviate the strain inflicted by economic uncertainties and global challenges. However, the lack of substantial support mechanisms for business has left entrepreneurs and enterprise right where they started.
“What was sorely lacking was any kind of emphasis on how we will grow SMEs within the economy itself, and we know the kind of impact SMEs can have on the economy,” said panellist Lunga Maloyi - economic policy director at Business Unity South Africa.
Maloyi added that while the budget did provide some pronouncements around using public procurement to stimulate the economy, the details were vague, “there’s really no concrete interventions that are being promulgated through that legislation”.
Moreover, despite provisions for set-aside targets to bring on board more black and women-owned businesses, the budget did not provide enough detail on how this would take place.
Transport sector challenges
With the state-owned freight transport and logistics entity facing severe capacity constraints and maintenance challenges that have devastated it’s infrastructure, including ports, rail networks, and pipelines, expectations of additional support from the budget were high.
“What was disappointing was that there weren’t any further resources put aside for Transnet,” said Maloyi.
“If you look at some of the networking streams in the economy and you pick out energy, transport and logistics, and water infrastructure… all three of those are in distress. As an investor, if I see that kind of commitment on the part of the state to getting things right in the economy, I would be encouraged to invest,” he added.
Education sector challenges
Despite the additional R25.7 billion allocated to the education sector to account for the public servant wage increase, and the R1.6 billion allocated to the early childhood development grant, the budget had failed to address important infrastructural issues at a basic school level.
“We still have around a thousand schools with pit latrine situations, schools that don’t have access to reliable electricity, reliable water sources, schools that don’t have computer labs,” said Naledi Nkhi, Senior Lecturer in Taxation at the University of the Witwatersrand. “Money needs to be put into that.”
Nkhi added that tertiary schooling level was also an important area of the education sector to focus on. Ensuring they were sufficiently prepared at university level for the challenges of the future workplace was paramount in addressing high unemployment rates, and securing a steady flow of professionals contributing to the country’s tax base. This, she added, may also help with keeping more tax-paying graduates and professionals from leaving the country.
“Clearly other countries love our graduates because they’re in such high demand,” added Retief. “The irony is that we have very good resources, if we learn to use them better.”
Tax and compliance
There were no changes to the VAT rate, which remains at 15%, but an increase in income and sin taxes, in an effort to grow the economy and create jobs, according to the minister. A global minimum corporate tax is also being implemented to combat tax evasion by companies operating in different countries, and to increase the tax revenue.
Despite the low likelihood that government would extend the solar tax rebate for households into the upcoming financial year, many were hoping for an update in this regard from the current budget.
Additionally, a major taxation area that remained untouched since the onset of Covid-19 in 2020 was the home office.
“The world of work by convention has changed, and I believe our legislation needs to get with the times in relation to that,” said Herman van Dyk, Independent tax and financial reporting consultant.
That being said, he added that since personal income tax was a proverbial “cash cow” for the state, introducing home office tax breaks would open the floodgates for claims of this nature, which made government’s apparent reservations to address this issue understandable.
PERSONAL FINANCE
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