Deloitte’s Cape Town budget breakfast was held at the CTICC on February 23 and featured an informative conversation with Deloitte director Anthea Scholtz, Keith Engel of the National Treasury and acclaimed South African economist Ulrich Joubert.
The panellists kicked off the discussion with their own general views and insights from Finance Minister Pravin Gordhan’s 2012 budget, delivered the previous day. Scholtz derived three main themes of interest; firstly, the fact that South Africans can look forward to a minimal tax relief; secondly, tackling the perception that the tax system favours high net-worth individuals and thirdly, that the long-awaited NHI (National Health Insurance) scheme will be introduced in 2012. This will in part be funded by said high net-worth individuals.
Engel came in posing the puzzling question of how in fact the NHI could be sustainably funded. “Do you raise corporate tax to 50%? But once you tax salaries too much, employers feel the pinch and cut back on labour; which makes our economy less competitive.” Increasing Vat is another alternative…yet it won’t do much to relieve the pressured middle-class, Engel points out. “The tolls are already going to hit them where it hurts. In our society, the middle-class is very squeezed, while the rich are very mobile.”
Joubert weighed in on the issue of retirement, and government’s plans to ensure employees are contributing sufficiently to pension and provident funds to provide for their non-working years. To employers, this means investigating the tax benefits of these provisions, while domestic and farm workers can look forward to government’s assumed responsibility in setting up pension funds on their behalf.
R236-billion being allocated to education should bring a sense of optimism to the public, who for the most part believe that the answer to many of our country’s problems lies in this department. “Yet, will this be applied efficiently, or will it just sink into the education ‘pit’?” Engel asks; voicing an opinion expressed by many.
The same concern can be applied to the R3.2-trillion investment into 43 major infrastructure projects, including a R200-billion refinery outside Nelson Mandela Bay.
On a positive note, Joubert did commend the Minister, as many did, on his prudency in cutting the budget deficit to 4.6%, and achieving overall growth in the economy, which is more than can be said for most countries in Europe.
Perhaps what impacted me most on my departure from the event, was receiving a flyer at the traffic light from Sars, which included quick facts on Budget 2012. It confirmed Scholtz’s comment that Sars is seriously upping its game. “Corporates, beware; those days of being able to hide are well and truly over.” Fortunately, for small business, the tax man has been very kind, and Engel affirms that we should be grateful for this.