State interference must stop

2013-02-19 16:14
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Fin24 user Wernher Friedrich writes:

Mr Gordhan,

One thing the ANC does not understand is that the state is there to create a conducive environment for the private sector to flourish. The state is a market maker not a market taker.

The economy is being downgraded the same way as Greece and other European countries and will be downgraded further if you and the ANC do not wake up. Having a growth rate of 2.5 % is not going to solve the employment problems in SA.

Currently everywhere the state interferes the market collapses, I refer to mines and strikes around the country. It is one thing to have a minimum wage, but another to have a profitable business.

When you and the state interferes, such as the case is with new mining regulations that poses such serious problems that will require the JSE to close down, it signals to the international investing community you have no idea as a government what you are doing, the country is sliding down so fast that I do not think we can stop a complete collapse any more.

The new tax on graduates is another example of very bad decisions, we already have very few people studying, with this move you are saying do not study we will take more from you, very stupid indeed.

You will see an immediate increase in graduates leaving the country, so then education will get even less of a chance to train good skilled people for the market, not to mention business entrepreneurs. Have you thought how quickly the higher education institutions are going to close down, when no one wants to study to pay the tax any more, or has that thought not come to mind?

Another very bad and corrupt decision is to move ahead with e-tolls; why are we punished for a road already paid for by taxpayers' money? Living in SA is becoming so bad that if one is not involved in some corrupt scheme, Schabir Schaik is a beautiful example, one can not survive any more.

If you and the ANC continue with these bad decisions, one thing is for sure: civil unrest is going to increase in magnitude, downgrading security of the country will continue, foreign investment will leave more and more, already mines are being closed and layoffs are a result, eventually you are going to have a civil war.

Maybe that is the plan, not sure but the ANC is doing everything right for a civil war. I WILL EMPHASISE THIS, COMMUNISTIC PRINCIPLES WILL NEVER WORK AND HAS NEVER WORKED IN ANY COUNTRY IN THE WORLD, the USSR is a prime example of thi. All countries flourish when markets determine the right direction, the state is there to create this environment - not damage it, as the ANC is doing now.

Last tip: stop income tax, raise vat, reason the more you earn the more you buy, so the state spreads wealth better that way. Scrap e-tolls, you will do more harm to the economy than good, R20bn in four years to be paid off, why, is there some corrupt payment before a due date to be done?

I thought the infrastructure investment done with taxpayers money via the state can be paid over a much longer term, or was this contract not done that way? One thing is clear: go ahead with tolls, and the country will overthrow the government so fast your head will spin.

Libya also thought they had all the power, news flash Gadaffi is dead. Government overthrown, do not think it cannot happen here.

Do you really want to create jobs? First, Fire Dina Pule at the Dept of Communications, she is uselss and the DG too. Put someone there that knows how telecommunications work, first of all with telecommunications the state can actually create a very favourable market, you have the option to create multiple little Gautengs accross the country.

Businesses can actually move head offices out of the metro to the place of resource, such as mining houses can be closer to the mine activity and still have brilliant communications all over the country.

This one step will do the following: 1. increase foreign investment in the country, because the state now invests into infrastructure that creates a domain for business to operate; 2. relieves pressure in the cities - more people will move with companies to where there head offices and place of business is; 3. jobs will be created, because where you have UNTAXED professionals, you need people to support your activities; 4. this will lead to more sustainable business practices and 5. the best thing is your GDP picks up, you produce more product, your currency is stable and trust returns to the economics and business cycles of the country and 6. you guessed it, we will be upgraded, which means our borrowing costs drops.

The ultimate is then the country moves in balance, having better opportunities for all, better opportunities for business and investment and people can earn a living.

Well, that is one way.

Tip 2: you continue to say we as South Africans do not save; the reason is because there is nothing to save after you have taxed us to death. The solution, dropping income tax every year helps, but do not give all the money back into people's pockets, give 50% back and retain 50% as a savings plan.

This will do 2 things again: 1. savings rate goes up; 2. our reserves increase faster, because we have more savings to count on in times of crisis.

One other thing is that the currency will appreciate, but the Reserve Bank can if required interfere in the market here, as they have done in the past to not let the currency become too strong and hurt exports.

That is all for now; hope this advice is taken and used, most times I think it gets thrown away and the same wrong decisions are repeated.

 - Fin24

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* Visit our 2013 Budget section for full coverage of Finance Minister Pravin Gordhan's National Budget speech.

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