The Brights Side Of Budget - Sona Summary With Glimmer Of Hope

Therelease of the South African National Budget brought about a sense of stabilityand reassurance for small and medium-sized enterprises (SMEs) across thecountry, albeit missing an opportunity for reform. Mazars tax team held a meetand greet with their clients at the Oyster Box last recently to discuss thefuture economics for South Africa. In an expected move, the budget made nochanges to existing tax rates or administrative burdens for SMEs, signalling acontinuation of the status quo.

A postbudget meet-and-greet took place last week at the Oyster Box Hotel, coupledwith a content-sharing session between the Mazars Tax team with Althea Soobyah,currently a Director: Tax Consulting at Mazars South Africa and Chief economistof Investec Annabel Bishop, chaired by Faith Mangope, host of 'METRO FM Talk'on SABC.

The 2024 budget made an apparent concessionto the financial pressure under which taxpayers are struggling by not raisingpersonal tax. However, Mazars points out that the Minister's refusal to adjustthe tax brackets for inflation is in effect a stealth tax. When a taxpayerreceives an inflation-related salary increase, the increase might push him orher into a higher tax bracket, and thus pay more tax. Similarly, the medicaltax credit rate has also not been adjusted for inflation.

Both of these measures, as the Ministeracknowledged in his speech, would play a major part in raising an extra R15billion to reduce pressure on the fiscus and help with stabilising thecountry's high debt levels.

However, Investec's Annabel Bishop confirmsthat, President Ramaposa delivered a safe budget, but that it could bedangerous given our financial situation, she said, "It was a balanced budgetprojection with many positive points."

"Having said that, it came in a verychallenging year. It was the best we could do under the circumstances. So muchdepends on the future. What comes out of the elections. Budget hangs on oureconomy and the ANC has itself to blame for their low voting counts. The truthis that without business our economy is failing."

Withthe unemployment rate at over 50%, our country is facing many seriouschallenges, Althea Soobyah explained; "When the future of our country isunemployed how are we going to increase the economy. We will get the money fromcorporate tax, that's how."

"The incentives have not been extended tohelp businesses and homes with load shedding incentives and the NHI is anelection ploy and should the truth be told, South Africa cannot afford it."

Overall, Mazars' consensus view is thatthis is a typical election-year budget, and the Minister has understandablyopted to keep the ship steady. However, given the difficult financial situationin which the country finds itself, a more fundamental approach to change thestatus quo would have been preferable. The only solution is to kick startgrowth, and there were precious few indications of anything new to start thisprocess. In particular, there was virtually no mention of measures to helpSMMEs grow; for example, by reducing red tape.

All things considered 2024 will be achallenging year, financially, for almost everyone.