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Bling culprits need to be brought to book

Cape Town - One would have expected the consequences for those found guilty of mismanaging finances, by splurging on cars, meals and consultants, to have been set out more clearly by Minister of Finance Pravin Gordhan, according to the Afrikaanse Handelsinstituut (AHi).

"We worry about a lack of accountability and political will to give effect to the minister's goals and ideals contained in his mini budget address. The ruling party will have to give this urgent attention," said CEO Christo van der Rheede.

"We are, nevertheless, pleased about the planned measures to minimise such mismanagement."

The mini budget is, in Van der Rheede's view, a clear financial framework for establishing how the objectives contained in the National Development Plan (NDP) could be financed.

"The outcomes for education, health, infrastructure development and local government and small business development remain on track," said Van der Rheede.

"Whether the letter and spirit of the mini budget speech will lead to increased economic growth, investment and job creation remains to be seen."

Pre-election focus

AJ Jansen van Nieuwenhuizen, tax partner at Grant Thornton Johannesburg also said the specific mention that Gordhan made of dealing with wasteful expenditure in government is very encouraging.
 
“The context of this medium term budget is clearly a pre-election one and focuses on addressing the common question which is ‘what is corruption and where is money being wasted?’," said Jansen van Nieuwenhuizen.

"This is a very politically targeted budget with initiatives announced that will resonate with the larger voting public."

Jansen van Nieuwenhuizen said there wasn’t any mention of increasing revenue and there was no indication by Gordhan of pending tax rate hikes for February 2014.

"In last year’s medium term budget there was a hint at SA needing to get ready for increases but nothing significant came through since then,” said Jansen van Nieuwenhuizen.
 
He said in general the budget speeches during February always raise concern about increases in public spending mostly due to the public wage bill.

"The finance minister has made specific comments around the fact that future increases in the public wages will be inflation linked going forward," said Jansen van Nieuwenhuizen.

"Although there will be an increase in overall spending, curbing of the public wage bill with specific and particular references made this afternoon, is promising.”

Little room for movement


Willem Oberholzer, tax expert and director at Probity Advisory, said it is commendable that Gordhan has taken a strong view on government spending.

He finds the alignment of the fiscal policy and outlook to the NDP equally impressive. 

"There is very little room for movement and we are seeing the minister putting the funds to good work," said Oberholzer.

The revised budget is R3bn lower, while the collection form individuals and companies are R1.9bn higher."

He said the drop in the collection from dividends tax/STC being down R5.9bn clearly indicates the shortages of cash in companies and the current cash being utilised for expansion.  

"With the growth factor of 2% the dividend collection growth will in my view remain low," said Oberholzer. 

"The impact of the Tax Administration Act is clear on the revenue collections from individuals and companies, while the legal impact thereof is yet to felt."

- Fin24


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