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Business reacts to 2014 Budget

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“We are pleased with the national budget speech delivered by Minister Gordhan as the statement recognised and offered some solutions to several pressing concerns in the business community. The message that it’s time for action and implementation is especially welcome and SACCI hopes that this tone is carried forward into the next administration,” said South African Chamber of Commerce and Industry (SACCI) CEO Neren Rau.

Sacci welcomed the attention that was paid to small business, saying that the tax compliance rebate proposal will reduce the administrative burden. “The tax compliance rebate proposal will reduce administrative burden and the recognition that the turnover tax is not working in its current form recognises the advice from the business community,” said Rau.

The R6.5 billion for SMME support over two years and tax exemption for grants to SMMEs will open significant funds to this sector, added SACCI.

It added that support announced in the budget for small scale farmers will help an otherwise overlooked industry.

“Sacci is truly impressed by this,” said Rau.

“The reduction in the deficit-to-GDP is a strong signal to investors that South Africa is committed to building investor confidence,” said Rau.

The National Association of Automobile Manufacturers of South Africa (NAAMSA) President Dr Johan Van Zyl welcomed the fact that the budget did not contain major tax shocks with tax increases limited to the fuel levy, tobacco and alcoholic products.

“Encouragingly, the budget proposals provided generous personal income tax relief to the extent of R9.3 billion as well as enhanced retirement benefits. The additional expenditure on social priorities and particularly in respect of education, training and skills development also represented a welcome feature of the budget,” said Van Zyl.

NAAMSA welcomed the postponement of the proposed emissions tax regime to 2016. “Further consultation on the principle of an ambitious carbon tax regime was both necessary and advisable,” he added.

The overall budget proposals, said NAAMSA should support higher levels of economic activity domestically and the budget provisions and the progressive reduction in the budget deficit, should be well received by international and domestic investors and financial markets, he added.

“He has increased controls on spending and is looking to widen their scope in future budgets. The reaffirmation of the National Development Plan (NDP) as the agreed way forward is also encouraging for the business and investment community,” said Nedbank in its analysis.

Speaking for the Port Elizabeth based Nelson Mandela Bay Business Chamber, CEO Kevin Hustler, said; “The Chamber believes that the Minister has shown a strong and steady hand in handling the finances of our nation through a tumultuous time, and for this, he must be commended. The Business Chamber’s chief wish for Budget 2014 was for the judicious allocation of funds towards the building and maintenance of the country’s critical infrastructure.

We therefore welcome public infrastructure investment to the amount of R847 billion over the next three years, with the Medupi power station coming online, Transnet’s additional rail capacity, and spending on social infrastructure, particularly in the areas of health and education.

We are pleased to note the R40 billion in infrastructure grants to local government for water, sanitation, energy and environmental functions, and look forward to seeing how the Nelson Mandela Bay Metro can access and benefit from this particular grant.

We appreciate the immense focus on renewable energy projects that are currently under construction, to increase power generation capacity in South Africa, with more investment in the pipeline.

We are encouraged, too, by the focus on long term city planning to encourage private investment in urban development, amounting to R814 million over the medium term.

We welcome the numerous initiatives towards economic growth, such as:

  • the Manufacturing Development Initiative, which allocates R10.3 billion over the next three years;
  • The Economic Competitiveness and Support Programme, which will provide R15.2 billion to business to upgrade machinery and increase productivity;
  • the Special Economic Zones, being allocation R3.6 billion to promote exports and generate jobs.

The focus on small business and entrepreneurship is welcomed. We welcome the R6.6 billion to support small business, as well as the easing of compliance burden on small business and the restructuring of the tax regimes.

We are heartened, once again, by the commitment to the payment of SMEs within thirty days. However, this must be enforced at a provincial and local level.

We note the expected growth rate of 2.7%, but believe that this is still insufficient. We will have to work hard to get to the levels required to encourage and sustain growth into the future. We agree that this is going to require dynamism and agility in the government, the private sector and labour.

It is important to note that government is pursuing the exploration of shale gas as additional energy source for our economy. This will require the participation of business in this new energy source and economy in our region.

We are grateful for the delay of Carbon Tax to allow business to have a greater understanding of its role, responsibilities and compliance with these regulations.

It is important that government is pursuing specific steps to make it easier to do business in the country.

We support the streamlining of regulatory and licencing approvals in the area of Environmental Impact Assessments, and also further steps to lower the cost of tax compliance.

It is reassuring to note that government is committed to providing policy certainty to investors, with a holistic framework for investment flowing from the National Development Plan. This places investment at the centre of the economic growth plan.

With this in place, and a number of incentives proposed, we hope to encourage future foreign and domestic investment.

Regarding the fiscal framework and long term sustainability, we welcome the emphasis on moderate public expenditure and the lowering of the budget deficit, as well as on government’s adoption of a balanced fiscal stance.

The emphasis on ensuring that expenditure is allocated efficiently, enhancing management, cutting waste and eliminating corruption is sincerely appreciated.

We are well aware of the cost containment instructions issued in January 2014, and will go a long way to ensuring that expenditure remains below the ceiling required in the next three years. We trust that the same cost containment measures will be adhered to at a local and municipal level.

We support the notion of government procurement supporting local industry additional black economic empowerment, but this requires dedicated champions within the provincial departments to foster such economic empowerment as we would like to see through the Buy Eastern Cape campaign.”

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Alan Straton

Chief Cook, Bottle Washer and Broom Mechanic at MyPE
Passionate about Port Elizabeth and definitely NOT packing for Perth. Alan's ethos is epitomised in the words of Nelson Mandela; "I have fought against white domination and I have fought against black domination. I have cherished the idea of a democratic and free society. If need be, it is an ideal for which I am prepared to die." See more articles by Alan.