Tito Mboweni delivered the much anticipated Budget Speech in South Africa on Thursday, addressing major economic concerns including the state of state of failing state-owned enterprises, the property market and personal income tax. Surprisingly, businesses and industry leaders were notably pleased with outcome and have a positive outlook on the governments intentions to bolster business and investor growth. Here's what they had to say:
“We are encouraged to hear about the government's commitment to the development of young industries, specifically the preferential small business tax regime and the reduction in cost of doing business. Additionally, the moratorium on excise for electronic vapour products (EVP) until 2021 will allow the industry a footing to establish itself as a contributor to the industrial strategy as outlined by the Minister. The R18.5 billion and R6.5 billion incentives towards industrial and small business, respectively, for the creation and retention of jobs along with the concrete steps to hinder disruption and corruption are also promising developments, and shows government’s dedication towards empowering fledgling industries and stamping out black-market products. That said, we are still concerned that the proposed combined legislation of tobacco and EVP will present a hindrance to the growth and opportunities the EVP industry is able to contribute to South Africa’s fiscus, and hope to engage the government on this going forward.”
— Asanda Gcoyi is CEO of the Vapour Products Association of South Africa (VPASA), an organisation that represents manufacturers, wholesalers and retailers of vapour products in South Africa. VPASA works together with government and other stakeholders to develop legal regulations and standards for the vapour product industry, and to ensure that consumers have access to information related to vapour products.
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“The growing unemployment rate, which harshly impacts South African youth and women, is a ticking time-bomb. The creation of new employment opportunities remains one for utmost prioritisation, and I believe that this lies largely in shifting our economic development endeavours towards rural areas. It is crucially important to turn our focus to rural economic development, using strategic sectors such as tourism and agriculture. As such, we welcome the Minister of Finance’s plans to prioritise these job-creating sectors. The allocated R500 million towards the finalisation of land claims over the medium-term should help in the availing of such lands for commercial activities that’d benefit communities, especially in these strategic sectors.
This year’s Budget Speech demonstrates the government's intentions to bolster growth in the small businesses sector. It is therefore in everyone’s interest that such businesses in tourism and of course those emerging in agriculture are given special attention, especially in rural South Africa. This has the potential to spur much needed immediate and sustainable growth that’ll contribute to job creation in real terms.”
— Jerry Mabena is CEO of Thebe Tourism Group.
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“We welcome the positive news from the Minister of lifting transfer fees on properties valued at under R1 million. We hope this will reignite the property markets in Gauteng and the Western Cape, which have flagged in comparison with areas that have maintained robust sales, such as the Eastern Cape.
We are seeing an aggressive approach from banks to give 100% loans to prospective buyers in our Westbrook estate in Port Elizabeth. In some instances they are offering up to 105% to cover the purchaser's bond costs. Some of our buyers are even obtaining additional funding to cover investment in features like pools and patios. We’re also pleased to see a reduction in personal income tax, which would help to make these bonds more affordable, and thereby further spur the property market.”
— Clifford Oosthuizen is the Managing Director of Westbrook.
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“Today’s Budget announcement by Finance Minister Tito Mboweni bodes well for the property sector, particularly the commitment to supporting the property market by adjusting the threshold for transfer duties. Transfer duty will no longer apply to properties that cost R1 million or less, which significantly reduces the financial burden on those looking to enter the market. It’s encouraging for the economy at large too, as property investment serves as an important barometer for the fiscal health of a country. The success of the pilot phase of the government's Help to Buy scheme is encouraging, too. To date, the initiative has supported more than 2 000 families to buy their own homes, amounting to some R1 billion in new lending in a single year.
All in all, we are encouraged by this year’s Budget Speech, as it addresses the major issues hampering our economic growth and development. Furthermore, the reassurance that the relevant ‘officials will find ways to use the allocations made through the Municipal Infrastructure Grant to ensure that municipalities not only build new infrastructure but also maintain the infrastructure they already have’ is good news. We welcome the plan to penalise the municipalities that haven't implemented measures to deal with corruption at municipal level as well as the news that municipalities in good standing will be able to buy electricity from independent power producers very soon as this is very positive for homeowners.”
— Carl Coetzee is CEO at BetterBond.
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"You can knock me over with a feather, I wasn’t sure I would be amazed in my life again! But no tax increase, the effective end to exchange controls, a budget speech that actually dealt with the harsh realities facing us without resorting to fanciful schemes and pie-in-the-sky proposals. Well done Mr Minister, you have given us realistic hope that the government is getting down to the nitty gritty.”
— Andrew Wellsted is a Director at CMS RM Partners, a leading black urban law firm specialising in providing high-quality, practical and innovative legal, tax and transaction advisory services. .
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“From our perspective, Minister Mboweni delivered a clear and constructive budget speech. From a fiscal revenue perspective, it may have been tempting just to tax high income earners even more, as many commentators had predicted for this year's Budget Speech but this comes with its own risks: if high income earners feel that they are being targeted by the taxman, they may choose to take their money elsewhere or worse – leave the country. This would result in a loss of skills when talented individuals leave, the closing of businesses and consequent job losses. With this in mind, it makes perfect sense to me that the government has introduced initiatives like Section 12J of the Income Tax Act as a long-term solution.
— Chris Derksen is a Partner at 12Cape, a Section 12J fund that owns and grows a portfolio of prime hospitality assets in Cape Town.
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“From the budget, it seems climate change challenges are among the top priorities for the government. This is evident in the increase in the carbon tax rate, vehicle emissions tax rate and the plastic levy. Further, Government plans to explore the potential for new environmental taxes and reforms to existing taxes such as a local air pollution emissions component being included in the fuel levy, introduction of a road pricing charge, carbon dioxide tax on vehicles, the review of zero rating for fuels and product taxes on electrical and electronic waste, and more tax on company cars. Overall, it seems SA car owners are going to be paying dearly for the privilege of owning them and that is on top of paying for the e-tolls.”
— Bernard Mofokeng is a Director at CMS RM Partners, a leading black urban law firm specialising in providing high-quality, practical and innovative legal, tax and transaction advisory services.