Nicola Mawson. Picture: Matthews Baloyi Nicola Mawson. Picture: Matthews Baloyi
Those
who watched the budget on Wednesday afternoon could be forgiven for yawning, or
even nodding off.
What
Finance Minister Pravin Gordhan presented was hardly earth-shattering, and
completely predictable.
He
hiked the usual taxes: the fuel levy went up 39c a litre, and cigarettes and
booze will cost anywhere between 6 and 10 percent, depending on the tipple, or
smoke, or your choice.
What
was a bit of a surprise was the way he dealt with the thorny issue of the
threatened additional taxes.
Gordhan
announced that those earning R1.5 million or more a year would now fit into
their own tax bracket, and pay 45 percent on what they earn.
He
also increased withholding tax on dividends.
This,
it strikes me, is a bit of a Robin Hood manoeuvre.
In
fact, the entire budget was transformative. He spoke of redistributing wealth,
of inflationary increases in welfare, of the need to protect the poor and
create an inclusive economy that benefits all.
The
Budget Review document – a rather thick book that lays the groundwork for the
speech – goes so far as to say that Black Economic Empowerment must be far more
inclusive and not just benefit an inner circle.
Read also: #Budget2017 is transformative
This,
rightly so, has been a bone of contention for many years, with the response
mostly being a rather lukewarm move to include communities in empowerment
deals, along with a company led by a Big Name.
I've
often wondered just what real benefit these communities get, and whether their
lives are better five or 10 years down the line. I suspect the euphoria of the
initial announcement rather overshadows the reality on the ground.
Yet,
if National Treasury steps in, we could see new models coming out that do turn
into inclusive economic growth.
Gordhan
also provided some light tax relief; he increased the tax free threshold from
R75 000 to R75 750.
He
also provided “relief” in the “affordable housing market” through an increase
in the threshold above which transfer duty is paid from R750 000 to R900 000.
However, I don't see how houses that cost almost R1 million are affordable.
That implies a salary of almost R30 000 – hardly the stuff of minimum wages.
In
a bid to foster a savings culture, Gordhan also said the annual allowance for
tax free savings accounts will be increased to R33 000, up from R30 000,
while the medical tax credit will be increased in line with inflation this
prudent
Apart
from those few tax breaks, there's very little to smile about for taxpayers in
the budget.
The
gist throughout the plethora of pages is one of putting a lid on spending,
doing more with less, cutting down on graft, tightening laws and – somehow –
transforming the economy so it is inclusive.
Some
aspects make great sense, such as insisting that, when large firms are awarded
government tenders of R30 million or more, 30 percent of the contract value
must go to small or black-owned enterprises, where feasible.
Please
note the caveat of feasibility – this is sensible and shows that government is
all too well aware that companies will twist things around a bit to qualify.
In
addition, procurement authorities are now empowered to set clear targets to
promote black- and women-owned businesses, participation of youth and disabled
persons and opportunities for rural enterprises and co-operatives.
Gordhan
also said South African suppliers will enjoy preference in respect of goods
with significant local content, thus supporting job creation.
Read also: #Budget2017: Smokers, drivers, wealthy to pay more tax
We
all know government business is big business so, if done correctly, this could
really have a real impact. That is assuming we have the knowhow and tools to
keep government business in house.
Which
is why it's so vitally important we skill more and more South Africans with the
right skills: ones they can use to generate income either by being an employee
or – even better – an employer.
Government's
example is something all business should follow, and – where there aren't
skills – teach them. That's how we will have inclusive growth.
Unfortunately,
South Africa's growth rates are still so pitiful that I don't know what real
impact these plans will have.
We
need to bump gross domestic product growth way past the 1.3 percent that's
expected this year.
And
for that, we need fireworks – big noisy, flashy ones.
I
agree that Gordhan has delivered a credible, albeit boring budget. I just don't
think that's quite the kick in the pants we need.
*
Nicola Mawson is the online editor of Business Report. Follow her on Twitter
@NicolaMawson or Business Report @busrep.
ONLINE