09:58 – Politicians were quick to give their feedback on Finance Minister Pravin Gordhan’s budget. This is what they said:
09:57 – Finance Minister Pravin Gordhan spoke to Fin24 just after delivering his budget speech in Parliament:
17:05 – Missed Pravin Gordhan’s budget speech?
17:01 – For the second year in a row, the National Budget has provided few details on a project to connect municipalities to broadband technology.
16:56 – Ernst Janovsky, Senior Agricultural Economist, Absa: “Sugar tax will in principle support human health. This will lead to a decline in sugar usage, resulting in lower domestic sugar prices which will have a negative impact on the sugar industry”.
16:48 – Chris Nunn, Regional Head of Barclays Africa Tax: “The voluntary disclosure programme could rake in billions in undisclosed offshore assets and broaden the tax base for future years.”
16:30 – Despite economists lauding Finance Minister Pravin Gordhan’s Budget Speech, the rand has plummeted almost 3% from its overnight close to R15.23/$.
16:29 – Samuel Seeff, chair of the Seeff property group: This has been a measured budget that has delivered positive sentiment so necessary for our economy and one that should reaffirm the underlying strength of our property market. There are many positives that came out of today’s budget and if government can deliver on these, it gives us much hope for economic recovery and with that, a prosperous property market, one that will encourage sellers and buyers alike. Much of what we heard today, save for the hike in the transfer duty for the R10 million-plus housing sector and rise in Capital Gains Tax (CGT), is positive.
16:08 – Ernie Lai King, Partner, head of tax and Asia practice at global law firm, Hogan Lovells: I’m pleased to see that the fisc was open to proposals. The exact details of the proposed tax amnesty are still to be released. There are some good and some bad areas in the Voluntary Disclosure Programme (VDP), for example, a no-name approach may be made (you can get an approval on principle – identities are protected). Some negative aspects are that trusts do not qualify for the VDP, and settlers, donors, and beneficiaries of foreign trusts, may only participate if they elect to have the trusts offshore, and assets deemed to be their own. This flies in the face of the legal position, prevailing in the jurisdictions in which the trusts were established. Many of the proposals which I have suggested have been adopted (such as the Tax Amnesty and VDP), and we look forward to engaging with the fisc in drafting the required legislation.
16:07 – Paschal Phelen chairman of Solar Capital: The single largest cost in Beatification of South African minerals is the energy cost. We can now produce solar electricity, in South Africa, at under US$0.04 per watt. This is the lowest in the world. There are no excuses for the mining companies to export gross raw material tonnage to China, India or other markets when they can be beatified at home. A tax incentive to Mining Houses to drive the initiative would go a long way. The government get the jobs boost, value add, and a lower rate of tax, against no jobs nor no tax.
16:02 – South Africans can give a collective sigh of relief, as Finance Minister Pravin Gordhan did not raise personal income tax. In fact, he provided some relief for low- and middle-income earners.
15:57 – We’re very impressed with Treasury for taking this steps to introduce a sugar tax, says health sociologist Aviva Tugendhaft, deputy director of research programme PRICELESS SA at the Wits School of Public Health.
15:50 – National Budget a stark reminder for consumers to do more with less:
Despite announcing personal income tax relief of R5.5 billion for lower and middle-income earners, the National Budget Speech was a stark reminder that consumers need to get used to doing more with less.
Ester Ochse, Channel Head at FNB Financial Advisory says financial discipline is crucial because consumers still have to deal with the rising cost of living. She points to the gradual rise in food prices, fuel levy, electricity and interest rates.
15:48 – Finance Minister Pravin Gordhan’s first comeback National Budget has been relatively calm and workmanlike, after all the expectations of of tax hikes and spending cuts amid tough economic times.
15:48 – Johan Gouws, head of Absa Asset Consultants: The key theme of the budget was captured in Minister Gordhan’s confidence instilling words that we can not spend money that we do not have and we cannot borrow beyond our ability to repay.
15:48 – Johan Gouws, head of Absa Asset Consultants: Invest SA promises to help reduce regulatory burdens for foreign investors who want to start up their own businesses in SA, leaving SA as a more friendly investment destination.
15:47 – While transfer duty on property sales above R10 million is to be raised from 11% to 13%, which in essence represents a form of wealth tax, coupled with an increase in capital gains tax, the National Budget delivered today (24 February 2016), was an inclusive budget which clearly focused on restoring confidence in South Africa’s economy both locally and abroad, says Dr Andrew Golding, CE of the Pam Golding Property group.
15:46 – Neil Roets, Debt Rescue CEO : Government has heard the pleas of its people. No increases in personal income taxes.
15:46 – SA Institute of Race Relations chief economist Ian Cruickshanks: It is of great concern that there was no mention of how the government intends to address the real constraints to investment that companies and investors routinely identify to the IRR. It is not enough to simply repeat that there is a commitment to ‘inclusive growth’, that ‘we must continue working together’ and that ‘investment growth must be scaled up’ – investors are looking to how the government intends to achieve this. Tax hikes and austerity measures will simply not suffice and may indeed extend South Africa’s stay in the economic doldrums if a compelling strategy for growth is not implemented.
15:40 – Finance Minister Pravin Gordhan has announced initiatives to help underperforming municipalities improve revenue collection, record keeping and infrastructure spend.
15:39 – Smokers and drinkers will have to brace themselves for steep increases in taxes on alcohol and tobacco products. Calculate here how much you’ll have to cough up for your “sins”.
15:37 – SA Institute of Race Relations chief economist Ian Cruickshanks: It will take considerable micro-policy reforms (in areas of labour, empowerment, property rights, and education policy), far beyond what was announced by the minister today, to put the South African economy back in a position to reach even modest rates of economic growth let alone rates that would allow any significant growth in job creation.
15:36 – Government debt will be stabilised over the medium term and South Africa is far from a debt trap, according to the Budget Review.
15:35 – Chris Harmse chief economist of Rebalance Fund managers: Although the spending on basic education increases to R265 billion over the medium term accounting for an large 17.6% of total government spending, 71.3 percent will go to teachers’ salaries. The question remains how effective are those teachers given the poor matric results?
15:35 – Chris Harmse Chief economist of rebalance Fund managers: Will the massive amounts awarded to spending on public housing R108.3 billion; R102 billion on water and bulk infrastructure; R30.3 billion on the improvement of the national non-toll roads be spend effectively and will it create the necessary jobs?
15:35 – Neil Roets, Debt Rescue CEO : Though tax increases are moderate, and across a broad base, this will still add strain to the already over-indebted. Consumers remain under severe financial strain and the recent interest rate hikes, and potential future increases will worsen the burden.
15:34 – Ian Wason, CEO DebtBusters: The “sandwiched generation” is being hit hardest by increases in living expenses – these are people that are financially strained through having to support their parents, their children and themselves. The Ministers commitment of R2.5 billion to the National Student Financial Aid Scheme to clear outstanding student debt will go a long way to assisting these families and will restore some hope for a brighter financial future.
15:34 – Thulani Gqirana of News24 inside parliament: When Gordhan mentioned Minister Van Rooyen the EFF benches erupted and MPs said “hayi nooo”
15:33 – Chris Harmse from Rebalance Fund managers: Will the extra R5 billion allocated to the National Student Financial Aid scheme be enough or the increase of R16.3 billion to Higher education and training? And the increase of 9.1% in universities subsidies and infrastructure? Time will tell. No mention is made on free tertiary education.
15:33 – Ernst Janovsky, senior agricultural economist, Absa: Sugar tax will in principle support human health. This will lead to a decline in sugar usage, resulting in lower domestic sugar prices which will have a negative impact on the sugar industry.
15:32 – Extra support to an amount of R16bn will go to the higher education system over the next three years, largely from restraint on the civil service wage bill.
15:30 – How much will your sin cost you extra this year?
15:29 – Ian Wason, CEO DebtBusters: Too many South Africans have excessive debt levels. The recent repo rate increase has pushed debt repayments higher – A huge sigh of relief for over-indebted South Africans that they don’t have to absorb an additional increase in VAT on top of everything else.
15:26 – Thulani Gqirana of News24 from inside parliament: Gordhan received a standing ovation from all parties when he finished his speech. ANC MPs shouted “ANC” as he stepped down. And the EFF responded by chanting “Gupta”.
15:24 – Loud cheers for Gordhan.
15:23 – Gordhan quotes Madiba in conclusion:
Looking back on his extraordinary life of resilience, and of commitment, former President Mandela said this: “I am fundamentally an optimist. Whether that comes from nature or nurture I cannot say. Part of being optimistic is keeping one’s head pointed toward the sun, one’s feet moving forward. There were many dark moments when my faith in humanity was sorely tested, but I would not and could not give myself up to despair. That way lays defeat and death.”
15:22 – Gordhan thanks his family as “politics can be rough”.
15:22 – Chris Harmse chief economist from Rebalance Fund Managers : The Minister tightens the belt as he lowers the expenditure ceiling by R25 billon over the next three years. Fiscal discipline will have to be the order of the day and may contribute to foreign capital flowing back to South Africa.
15:22 – Neil Roets, Debt Rescue CEO : Increases in sin taxes were expected. The sugar tax not so much. The R5.5bn relief to middle and lower income groups are very welcome, as they are most affected by the current economic climate. The increase in the fuel levy will affect the expected fuel price decrease announcement this week.
15:20 – Cheers when Gordhan thanks former finance minister Nhlanhla Nene for his contribution to the economy.
15:19 – Jeers and cheers when Gordhan thanks Zuma for his leadership and support.
15:19 – Gordhan: We have avoided reckless policies which might have dragged us into recession or reversed the capital flows we need. We have a sound macroeconomic and fiscal framework, and the will to work together for faster and inclusive growth.
15:19 – Johan Gouws, head of Absa asset consultants: It is a budget of priorities and about placing the country on a sustainable growth path.
15:19 – Gordhan: All too often, bureaucrats and businesspeople speak past each other; the needs of the young are not the same as those of the elderly; the rhythms of the township differ from those of the suburb. Race, class and language differences interfere with progress, even when we have shared aspirations. We need to bridge these divides.
15:18 – A vehicle called Invest SA will establish one-stop shops to reduce red tape for prospective investors who want to start up their own businesses, Gordhan says.
15:17 – Gordhan: The recent tremors felt by emerging markets are a warning that we need to take corrective steps urgently or we will be worse off. At the same time, we need to move forward to mobilise the resources and capacity of all our people, large and small enterprises, civil society organisations and public-private partnerships.
15:17 – Gordhan: Our economic imperative is to ignite inclusive growth. This is central for jobs, for lowering debt, for delivering services and building infrastructure for a 21st century economy. Let us chart a new course for the economy and well-being of all South Africans, particularly for those hardest hit by unemployment – the low-skilled and the youth. This is not only crucial to address social imbalances and inequality, it is also fundamental to encouraging investment.
15:17 – Johan Gouws, head of Absa asset consultants: Minister Gordhan is delivering a consumer friendly budget, recognising the pressures households are facing.
15:16 – Ian Wason, CEO DebtBusters: Credit active consumers are in a debt crisis situation with 54% struggling to pay their monthly account obligations on time. Currently, DebtBusters sees these over-indebted clients spending 102% of their income on debt. Taking advantage of tax free savings is impossible for these individuals.