National Treasury
The Nelson Mandela Bay Business Chamber said earning confidence from business and investors was critical in rebuilding the country’s economy.
Commenting on Wednesday’s budget speech by the Finance Minister, Enoch Godongwana, the NMB Chamber noted that the budget was an important vehicle in enabling this process.
CEO, Denise van Huysteen, said they were “relieved” that the budget speech was finally tabled following last month’s postponement, thus avoiding any further delays to a critical event for the national economy.
She said in a statement that the rapid geopolitical shifts, including the onset of trade wars, would have major implications for South Africa’s economy.
Van Huysteen said during these unprecedented times, the country needs to be agile and proactive in responding to these changes by dramatically speeding up efforts to improve logistics, addressing infrastructure issues while improving municipalities.
She said the Budget must thus promote economic stimulation and improve the outcomes from government spending so that more focus can be placed on getting an enabling environment in place to encourage much-needed critical business investment, and job creation.
“The increase in VAT comes at a time when businesses in our metro are already grappling with a fragile and challenging economic environment caused by local, national and global developments.
“As a result, this additional tax burden will likely force businesses to pass on the increased costs to consumers and will lead to higher prices for goods and services, reduced disposable consumer income, and placing further financial pressure on households already struggling to make ends meet,” Van Huysteen added.
She said the NMB Chamber also welcomed the fact that corporate income tax would not be increased, especially given the fragility of the economy.
Van Huysteen noted that some businesses would have found themselves with no choice but to downsize or reduce their workforce, which would have been disastrous for the region which has an “alarmingly high” rate of unemployment.
“The creation of job opportunities is crucial, and higher taxes risk further hindering these efforts, as they could discourage the very growth that is necessary for generating employment.
“We further welcome the fact that public-private partnership regulations will be amended to encourage more private sector participation, particularly in the area of transport and logistics where the Chamber and its members have been lobbying for a more effective rail network to support key industries in the region such as the automotive and agricultural sectors.
Van Huysteen said the focus should also be on improving tax collection efficiency, dramatically improving the productivity levels of government entities, reducing wasteful government expenditure, and fostering innovation and investment in the economy.
The Chamber also called on the government to prioritise creating a conducive environment for businesses to thrive by dealing with infrastructure challenges and reducing unnecessary red tape.
“We trust that the formal approval of the Budget by the relevant parliamentary committees will be facilitated expediently in order for the implementation to commence.”
