Durban — Chief economist at Agri SA Kulani Siweya said they are hopeful that the Mid-Term Budget Policy Statement (MTBPS), to be tabled on Wednesday by Finance Minister Enoch Godongwana will outline critical measures to support the agricultural sector.
Siweya believes that a number of crises threaten the sector’s continued growth. These are the impact of the recent crippling Transnet strike, the ongoing load shedding and high input costs.
Siweya said Godongwana must use the opportunity of the MTBPS to signal interventions that can help to bolster the sector, which provides around 874 000 jobs and contributes more than 2% to GDP, despite the challenges of the past three years. Siweya said Godongwana must give particular attention to measures that safeguard the top-performing and labour-intensive agricultural sector.
“Among the interventions within Godongwana’s control is the provision of tax relief for hard-hit agricultural industries. Tobacco, grape and cane farmers are among those hit hard by high fertiliser and fuel prices. These industries therefore need relief from ‘sin taxes’ that only further reduce their ability to withstand current price pressures,” said Siweya.
He said the Treasury must also review the diesel rebate announced by the South African Revenue Service (Sars) on March 18, 2022. Siweya said the unilateral changes announced by Sars fell short of meeting farmers’ needs on critical points. Rather, they lowered the refund percentage of the General Fuel and Road Accident Fund levies and failed to provide certainty of key issues such as logbook formats.
Godongwana must also review proposed changes to the Financial Intelligence Centre Act, 2001 (Fica), which would see suppliers of highvalue goods become subject to Fica requirements in respect of transactions exceeding R100 000, Siweya said.
“Were this proposal adopted, it would impose significant administrative costs on already embattled farmers. It is essential that this proposal is withdrawn,” he said.
Siweya said the Treasury must reconsider the proposed limitation on the assessed losses that businesses can write off against their taxable income.
“For cyclical sectors like agriculture, this allowance is often a lifeline and a key contributor to making continued agricultural production financially viable. A disadvantageous amendment, especially in the midst of an ongoing cost crisis, would be a calamitous and costly mistake,” explained Siweya.
These sector-specific interventions must be supported by responsible macro-economic policies and Agri SA will be watching for a number of key indicators that the government is committed to fiscal discipline and to putting South Africa on a sound fiscal footing, he said.
These measures include, decisive action to address the public sector wage bill; limitations on bailing out under performing State-Owned Enterprises and increasing investment into infrastructure projects with positive multiplier effects.
Agri SA believes that the agricultural sector can continue to outperform other sectors and add to the number of critical jobs it provides in South Africa’s rural communities and throughout the value chain.
Daily News