Stevie B predicts Budget Speech
Written by Steven Bacher
On the 25th of February, the Finance Minister, Nhlanhla Nene, will deliver his second budget speech to Parliament. He records the climate of low growth, low interest rates, falling inflation and political tension. Although I am hopeful for tax cuts, and there have been increased efforts to recover stolen funds and a reduction in the fuel levy, the reality is that everything is likely to be increased. This is despite the poor state of the economy. This will not be consumer friendly budget. Hopefully there will be light shared around the financial control of Eskom’s wasteful spending, especially around bonuses for performance targets attained.
Some might take the opportunity to increase the fuel levy while petrol is relatively cheap. I agree with that, but it should be combined with the scrapping of e tolls in GAUTENG. The Tax Free Savings Initiative might seem like a good idea to encourage savings, but we live in a society of debt and don’t have much to save so not many families can take advantage of such tax policies. We need to encourage foreign investment to grow our economy because the current 1,4% is just too low for an emerging economy.
I have a feeling we will see an increase in personal taxes, especially at the higher end, however I believe personal and corporate taxes should be reduced over time and replaced with a higher VAT rate that punishes consumption. A one or two percent increase in VAT will be absorbed by consumers a lot easier than increases in personal or corporate taxes. I fear VAT will not be increased but personal tax will.
There will be the usual increases in sins taxes, education, police, health, education as we have seen in previous budgets. I would like the government to outlaw these lengthy commercials about funeral plans that clog the air waves. I think they could be a scam in the end, but would rather have real investments being aired.
Finally the most important thing we need to see in the budget is spending discipline. The public sector wages are under review and this could blow the countries budget if these are not well managed. And then we will go deeper in debt for current expenses. The ability for municipalities to actually use their entire budget will go a long way to help with service delivery which is lacking badly in our country.
Tune into Kaya Bizz on 25 February at 5pm to catch the Budget special with Stevie B.