MANCOSA in partnership with The Sunday Tribune, hosted a Post Budget dialogue dinner to provide an in-depth analysis through a well versed panel, who discussed the tax, economic, political and business sector spend for the 2017/2018 fiscal year. The panel included, Professor Dilip Garach; Mr Christopher Gilmour, Mr Lukhona Mnguni and Mr Mazwi Xaba.
The programme coordinator, Mrs. Bakhetsile Mangena, welcomed various business partners, guests and introduced each of the panel members who addressed the audience in their knowledgeable fields.
Professor Dilip Garach, a tax specialist, highlighted the main implications of the increased tax rates on South Africans; “echoing Minister Gordhan statement, the current expectation on the total tax revenue for 2016/17 will be R1.144 trillion, which amounts to an increase of 7 per cent on the previous fiscal year. The tax proposals this year will raise an additional R28 billion, by comparison with revenue estimates based on full adjustment of personal income tax and excise duties for inflation.
The main tax implications are:
- Personal income tax rate of 45 per cent for those with taxable incomes above R1.5 million.
- Increase in the dividend withholding tax rate from 15 per cent to 20 per cent.
- Limited bracket creep relief, increasing the tax free threshold from R75 000 to R75 750.
- An increase of 30c/litre in the general fuel levy and 9c/litre in the road accident fund levy.
- Increases in the excise duties for alcohol and tobacco, of between 6 per cent and 10 per cent.
South Africa, requires continued strengthening of the capacity of SARS and enhancing its relationships with taxpayers is vital for our fiscal health.”
Mr Christopher Gilmour, Investment analyst at ABSA Bank, who provided an economical analysis on the Budget summaried the economic spend as follows: “In order to determine the economic implications on a countries budget spend for each financial year, there are many factors that need to be taken into consideration, such as the current global economic status and the South African economy over the last year.
Global Economic Background:
- The Trump Presidency, has been sticking to campaign promises.
- US rate hiking cycle appears to be on track, yet they expect 2 or 3 more hikes during this year.
- China growth is slowing down and this poses a fundamental shift in economic dynamics.
- India seems to be taking over from China as the leading global trading market.
- Brazil & Russia are in deep recession but their equity markets are buoyant.
- African growth intimately is connected to Chinese growth of only 1.5% in 2016.
- IMF Global growth outlook poor; 2016 < 2015, however 2017 is looking slightly better.
- UK Brexit-systemic danger apparent to some countries.
SA Economy over the last period
- Drought ending-positive impact on food prices
- Marginal improvement in economic growth in 2017
- Twin deficits still worrying, though declining
- Politics-the age of coalition government
- Ratings agency downgrades-avoided for now-June?
- This budget was designed to allay the fears of the ratings agencies
- The spend is relatively pro-poor
- The Minister opted for deficit reduction over growth
- Opinions divided on whether or not growth of >1% can be sustained
- Middle to upper middle income consumers hardest hit, with a concomitant impact on consumer spending
- At some point, profound structural reform of the economy will be required for growth.”
Mr Lukhona Mnguni, who provided a political analysis of the Budget Spend, stated; “It is no wonder that in the year preceding this budget, irregular expenditure in provincial and national departments as well as in state owned enterprises increased by 80%. A whopping R46-Billion was announced by the Auditor-General as having been the amount of irregular expenditure for the 2015/16 financial year. Yesterday, the Minister of Finance told us that the revenue shortfall was R30.4-Billion and this was “the largest underperformance relative to budget estimates since 2009/10”.
What is more interesting from the said Regulations is that the contribution of Broad-Based Black Economic Empowerment (B-BBEE) status of a company is much weightier on contracts below R50-million. For those contracts the point scoring split is 80/20, 80 being on price and 20 on B-BBEE status. However, the split is 90/10 for contracts above R50-million. This means that big companies get punished less for non-compliance with B-BBEE requirements and yet these are the companies with higher spending power to influence the development and progress of black people on things such as skills development, employment equity, social-4 economic development, preferential procurement etc. that contribute to a company’s B-BBEE level. It seems the President’s speech was revolutionary about Regulations not so revolutionary for the advancement of black owned businesses and black people in general.”
Mr Mazwi Xaba, concluded with a positive sense when he stated, “These are tense times politically and economically, we don’t know if Finance Minister will last his whole term, although much of what he said didn’t display many surprises, but rather a good balancing act. It was reassuring to hear the word transformation as many people are gradually realising that we must transform as a whole country. We need to be proud of our achievements as South Africans’ so let’s applaud ourselves from time to time.”
The dialogue ended with an interactive question and answer session and the guests were then treated to dinner.
View the gallery here.