Home Media Press Releases 2015/16 Budget unlikely to Stimulate Growth Required

2015/16 Budget unlikely to Stimulate Growth Required

Following the 2015/2016 budget announcement, Kemp Munnik, Head of Tax Services at SizweNatsalubaGobodo, believes Finance Minister Nhlanhla Nene’s measures will not stimulate the growth required.

"While the increase in personal tax was expected, it’s again a case of the higher income group effectively carrying most of the tax burden. This continued cycle of collecting more and more money from the same few people and then effectively spending more, is never going to stimulate economic growth. However, that having been said he could well have increased personal tax more than a percentage point so I suppose that can be seen as a positive,” he comments.

Deputy Minister of FinanceVictor Sekese, CEO of SizweNtsalubaGobodoKemp Munnik2015/2016 budget announcement

Another positive for Munnik is the absence of an increase to Capital Gains Tax, however he says the same absence of an increase is disappointing when it comes to VAT. "Considering that internationally VAT is comparably low, I believe now would have been the right time to have increased it. However, politically Minister Nene obviously saw otherwise,” he adds.

And while Munnik says the anticipated increase in the fuel levy, is balanced with the increase in the RAF levy and rate tariffs, detail is still lacking in terms of how the income generated from these increases will be allocated.

"I find it worrying that Eskom, the country’s biggest hindrance to growth, and measures to fund it, which are critical, was not detailed in the budget. In this regard measures to fund the National Health Programme and Nuclear Programme were also absent.

"When it comes to equity, offering equity is all well and good, but government is still not addressing the key issues of corruption and mismanagement. The small business incentive is hardly worth much if these businesses are unable to operate due to power cuts,” he comments.

Also lacking in detail for Munnik is where exactly government plans to cut expenditure. "Overall the budget did not detail the measures that will be taken to address key issues and in that regard can be regarded as a relatively safe one. In my view not increasing the tax base and the continual approach of collecting more from fewer is never going to get us to where we need to be,” he concludes.