Business responds to Gordhan's budget

2013-02-27 20:23 - Sapa
Finance Minister Pravin Gordhan in parliament. (Picture: AFP) ~ AFP
Cape Town  - The 2013 national budget failed to outline plans to reduce South Africa's inflated public wages bill to sustainable levels, the SA Chamber of Commerce and Industry said on Wednesday.

"In our expectations for the budget, we wanted attention to the rising public sector wage bill," chief executive Neren Rau said.

"We need to curtail this growth."

For small, medium and micro enterprises, Sacci welcomed efforts aimed at reducing "red tape" through the SA Revenue Service.

"But we will have to test in the course of this year whether this will make a meaningful difference," Rau said.

Plans aimed at fostering small businesses under the National Development Plan were welcomed, and the creation of the Small Enterprise Financing Agency.

Sacci welcomed the promise of negotiating tax incentives in the Special Economic Zones.

Rau said this would help attract multinational corporations, which for many years had favoured other African countries.

"Today we have seen renewed efforts to attract global multinationals to South Africa.

"In the past we had infrastructure, but were not providing incentive," Rau said.

Rau said Sacci was heartened by commitment to the fight against fraud and corruption in the budget, and new plans which would require local authorities to submit plans for funding allocation.

Sacci also welcomed the fact that there was no tax increase, as there had been speculation that there could have been such an increase for those in the upper income brackets.

"The temptation to increase taxation of the existing tax base is high, but this will not be necessary if the correct measures are taken to cut unnecessary government spending."

This relief was offset, however, by increases in fuel levies.

"The increase on the fuel levy, against the backdrop of rising fuel prices, add to the cost of moving goods and that is a worry," Rau said.

This was particularly a concern for the sustainability of small and medium enterprises.

Sacci was also concerned that the budget did not outline the funding model for the proposed National Health Insurance [NHI] scheme.

"...The announcement that the NHI could be funded by higher taxes is highly concerning."

The Coega Development Corporation particularly acknowledged the special economic zones (SEZ) incentives.

"We are pleased to note that the government is embarking on a path to have government support mechanisms in place that will assist in the quest to enhance investor uptake," Coega spokesperson Ayanda Vilakazi said in a statement.

The SEZ programme, announced last year, had received funding to build world class industrial parks.

Discussions were being held with Trade and Industry Minister Rob Davies on specific tax incentives to enhance this initiative.

Gordhan announced earlier that a R2.9bn tax incentive for SEZ would be introduced to encourage businesses to set up shop in these zones.

Firms would enjoy a 15% corporate income tax rate and also benefit from an employment incentive which Treasury planned to introduce, and which would allow a tax deduction for employment of workers earning less than R60 000 per year.

Nafhold, the investment arm of the National African Federated Chamber of Commerce and Industry (Nafcoc), welcomed the budget speech.

Nafhold chief executive Michael Leaf said the public could breathe a sigh of relief that the minister had not increased personal tax.

"Credit should be given to the minister for coming [down] hard on tax avoidance."

Gordhan's encouraging the private sector to invest more in the economy, to supplement government investment in spurring sustainable job creation and poverty eradication, was also praiseworthy.

* Visit our Budget Centre for full coverage of the 2013 Budget Speech, including a sin tax and personal tax calculator.

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