Consideration of future measures to relieve the tax and regulatory burden of small and micro-enterprises is expected be a key issue in South African President Thabo Mbeki’s State of the Nation speech on Friday.
Within the broad theme of focusing on delivery targets — with the emphasis falling on rail upgrades and electricity and water provision especially for the poorest of the poor — government has been in close talks with business, including black business, to forge ways of relieving red tape for small-and micro-sized businesses within the broad target of providing the right environment to create jobs.
While Mbeki is unlikely to go into the specifics — such as lowering tax for small business — he will set the scene for the Budget to be delivered by Finance Minister Trevor Manuel on February 23. The government is concerned about the cost of doing business and is pondering measures to put the country on a higher growth path.
The government met with big business in December last year — ahead of this year’s lekgotla of the Cabinet — at which constraints on doing business were considered in detail. Frank discussions were held about whether the current tax system was too complicated.
While the official opposition’s Tony Leon has repeatedly focused on the need to achieve high levels of economic growth in the order of 6% or more and to strip away what he views as uncompetitive labour protective legislation, Mbeki’s main thrust is expected to be placed on each sector of the economy — and the performance of government’s delivery in each of these sectors.
For example, water should be in every home by 2008 — which is within the current government’s electoral mandate which ends in 2009 — and each household should have sanitation by 2010. In addition every household should be electrified by 2012. Progress in government delivery will be a key speech focus.
Government is proud of South Africa’s record on achieving fiscal and monetary discipline and the president is almost certain to dwell on the success of bringing down inflation and reducing interest rates. Mbeki is likely to dwell on infrastructure spending programmes already announced by South Africa’s major parastatals.
A special focus on telecommunications liberalisation can also be expected — with Parliament scheduled to consider the Convergence Bill this year.
While government will be publicly placing on record in Friday’s speech the successes in implementing its programme of action — said to enjoy an implementation success rate of about 70% — special emphasis is expected to be placed on the upgrading of the state rail service and, in particular, the Rail Commuter Corporation. Delivery in this area is understood to have been below target.
Mbeki is also expected to consider the social sector deliverables — including the fight against TB and HIV/Aids, while government’s target to reduce crime by 7% to 10% a year will also be under focus. The president is also likely to report on how successful the campaign against the 200 top criminals is proceeding.
Friday’s opening of Parliament — shortly after 11am local time — is expected to be attended by distinguished guests such as former presidents Nelson Mandela and FW de Klerk as well as top business and labour leaders. – I-Net Bridge