By Alec Hogg
I’ve been going into the recent archives to see what we might expect in tomorrows’s Budget Speech. The 2012 edition is instructive when then Finance Minister Pravin Gordhan, with a straight face, urged the public sector to “pursue value for money with the greatest possible vigour and ensure taxpayers’ money is well used.” Unlikely we’ll hear that repeated by Nhlanhla Nene after that R250m “invested” on security upgrades at President Jacob Zuma’s Nkandla homestead.
As serious, though, is how wrong the Treasury called economic growth. Basing forecasts on an improving global economy (which happened) and the adoption of the National Development Plan (which didn’t) Gordhan confidently predicted SA’s economy would recover “to 3.6% and 4.2% growth in 2013 and 2014.” Expansive social and other spending plans were based on those predictions. Numbers which turned out to be a massively optimistic as the economy stuttered to 1.9% in 2013 and at 1.4% last year.
Missing the targets by such a wide margin translates into an immediate shortfall of R12.5bn. If it were a company, SA Inc would be forced to slash spending to stay afloat. But Governments have the easier option of raising taxes. So brace yourself for a probable 20c a litre tax on fuel; and a couple of percentage points extra on CGT, dividends and the top marginal income tax rate. The big question, though, is whether policymakers have learnt anything from the predictable inability of this economy to respond to business-unfriendly policies. More hot air and empty promises? Or sensible economics? Will let you know tomorrow afternoon.
Received from Alfons Mauchle
You have summarised the situation very well.
Nothing really to be positive about
We are constantly working with sand in the gear-box, and instead of filtering it out they add more grit and rubbish.
Received from William Kelly
He’s doomed Alec.
There is nowhere left to hide. Fuel levy will be more than 20c. Marginal tax rate increases are popular amongst the voters. I’m afraid he’s got precious little choice.
Received from Oscar Volkwyn
Sadly true. I was amused that the SONA attributed the poor economic growth as a worldwide situation, yet another lie.
What about China’s consistent 7% growth, the above 5% for some of the other BRICS partners and closer to home 5% for some of our SADC neighbours and Sub-Saharan Africa. Time for the Finance Minister to spot the differences, education, labour productivity, blatant corruption and money wasted to undermine the constitution to assure retention of power. (Looks more and more like Zima, extractive political and economic processes – “Why Nations Fail”)
Most concerning is the reality that that larger part of the voting population swallow the lies when it comes to the polls (present or absent). In defence, a credible alternative and education to understand how democracy works is needed for our fragile democracy and economy to achieve its true potential.
South Africa is a great country and has great people!
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