National

Budget 2013: Business welcomes Gordhan's plans

Sapa

The business sector has mostly responded positively to the budget announced by Finance Minister Pravin Gordhan in Parliament.

Gordhan said in tabling the Budget that tax incentives to employ young people, and for people employed in the special economic zones, were on the cards. (Gallo)

"We share the goals of the minister. We want to see an economy [that is] better, bigger and stronger," said Business Unity South Africa (Busa) special policy adviser Raymond Parsons on Wednesday.

"We believe the National Development Plan (NDP) is the instrument that we need to do that. It also helps to create a climate of more predictability and certainty in the policy environment."

He said it remained important that the NDP be implemented on a sustainable fiscal basis.

Busa echoed Gordhan's warning that achieving this required higher growth and employment.

But the South African Chamber of Commerce and Industry (Sacci) said the 2013 national budget failed to outline plans to reduce South Africa's inflated public wages bill to sustainable levels.

"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."

'Red tape'
For small, medium and micro enterprises, Sacci welcomed efforts aimed at reducing "red tape" through the South African 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."

Incentive schemes
The Federation of Unions of South Africa (Fedusa) welcomed certain aspects of the 2013 budget.

"Under the circumstances we are finding ourselves, where the economy is starting to recover, we welcome some comments in the budget," Fedusa general secretary Dennis George said.

​He said Fedusa hoped the government would deal with youth incentive schemes appropriately.

"We are concerned that companies might want to misbehave and send out older and experienced workers, in favour of younger workers," said George.

"However, the minister said this would be discussed further in Parliament and we welcome that."

Gordhan said in tabling the budget that tax incentives to employ young people, and for people employed in the special economic zones, were on the cards.

He said a revised youth employment incentive would be tabled in the National Assembly, together with a proposed employment incentive for special economic zones.

George said the country's leaders needed to be a "bridge of trust" to citizens.

"People are looking up to leaders for direction. The economy is in our hands, not in the hands of the market."

Public debt
Meanwhile, trade union Solidarity expressed disappointment with the budget, saying tax payers "still don't have the opportunty to put the money they pay in taxes to more effective use".

The Solidarity Research Institute said Gordhan should have curtailed public debt and cut general tax to achieve sustainable development.

It said, "Gordhan’s announcement of a nominal relief in personal income tax does not constitute real relief. – Sapa

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