Organised business in the Eastern Cape has broadly welcomed yesterday's budget announcement by Finance Minister Pravin Gordhan.
The Border Kei Chamber of Business says while there are billions of Rands available over the medium term, reservations still remain regarding governments capacity to engage and work with business.
The Border Kei Chamber says this is paramount in order to ensure there is no further infrastructural budget underspend.
Meanwhile, the Nelson Mandela Bay Chamber of Business described the budget as balanced and disciplined.
Chamber CEO, Kevin Hustler says they welcome the focus on enabling economic growth, investment and job creation, and especially support for small businesses.
Read the full chamber statements below:
BKCOB STATEMENT ON BUDGET SPEECH 2012/13
The Border Kei Chamber of Business (BKCOB) wishes to express its overall acceptance and welcoming of the positive Budget Speech 2012/13 as delivered by the Minister of Finance Mr Pravin Gordhan.
Points which are welcomed in the budget speech were:
· Personal income tax relief of R 9.5 Billion.
· The VAT rate remaining the same considering the international economic climate
where VAT rates are seen between 15 and 20%.
· The further tax relief to small businesses and micro-enterprises, that being the taxfree
threshold being increased as well as the 10% rate being reduced to 7% is
extremely positive from a business point of view.
· The Ministers statement on government departments paying their creditors within a
period of 30 days is positive and business would be interested in what interventions
are introduced.
· Lastly, business welcomes the recognition of the importance in stamping out
corruption in supply chain and tender processes. We look forward whether
government will indeed follow through on Minister Gordhan’s assertions.
The following issues were cause for concern:
· Most significantly was the unexpected 5% increase in dividends tax (Previously STC
from 10% to 25%).
· Although there are the increases in the primary and secondary tax rebates to combat
inflation, these savings will be recouped by the fiscus through other avenues such as
the increases in the fuel levy by 20 cents.
The lack of a certain plan for the NHI - there is still no way of funding the venture and the
fact that there is a pilot NHI project, raises concern especially considering that there already exist mechanisms such as PPP legislation to bridge the funding gap
· The fact that foster care and old age pension grants have been increased by 4 and
5% respectively, raises concern when other social grants are sufficiently catered for
· Finally, Chamber was rather expectant in the budget to be far more forthcoming on
capital infrastructure projects, specifically focused on how they would be rolled out.
In conclusion, Chamber emphasises the fact that although there are billions of Rands
available over the medium term, there remain reservations with regards to governments
capacity to engage and work with business which is paramount in order to ensure there is no further infrastructural budget underspend.
NMB BUSINESS CHAMBER - COMMENT ON BUDGET 2012
Business welcomes the Budget's strong focus on an enabling environment for business growth, especially for small business, and factors supporting job creation, including the infrastructure development programme that is government's key intervention on creating employment and supporting economic growth.
The Minister made several references to lowering the costs of doing business and reducing red tape, and this will make a positive, practical contribution to a more enabling environment for business.
We agree that an 'extraordinary national effort' is required from all role-players working together to address unemployment & poverty. Positive evidence that this is being implemented is that some of the recommendations made in Nedlac were taken note of in the budget - we encourage that this continues, reflecting the spirit of the 'working together' referred to by the Minister.
Confirmation of the R845-billion in approved and budgeted expenditure will give effect to the infrastructure plans announced by the President in the State of the Nation address.
Tax relief for small businesses, as well as easing the tax administration burden on small businesses, holds the potential to boost the ease of doing business and reduce barriers to entry for new entrepreneurs. This is very welcome as small businesses are known to be the key engines of economic growth and job creation.
The Minister's statement that government needs to strengthen its rules to ensure that creditors are paid within 30 days is good for business, and for SMEs in general whose cash flow is critical to keeping their businesses going. We would like to see that this is enforced, particularly at provincial and local government level.
While it is pleasing to see the increased investment in public goods such as health, education and human settlements, the ability to spend these funds effectively and ensure that the expenditure translates into more effective teaching and learning, and quality healthcare and public infrastructure for more people, especially the poorest of the poor, is still questionable.
In this regard, the Minister's warning that public officials will be held responsible for under- or mis-spending of public funds is welcome, and we would like to see it carried through in practice at all levels of government.
Similarly, the additional steps taken by National Treasury to combat fraud and corruption are a positive signal, which we would like to see strongly implemented.
Consolidating financing for small enterprises in the Industrial Development Corporation makes sense, and we welcome the focus on a range of initiatives to support competitiveness and leveraging state procurement to stimulate business.
Other points of focus which we highlight:
-Addressing youth unemployment so that the next generation can be become economically active.
-The Cities Support Programme - we are interested to see its mandate and how it can play a role in NMB, particularly in improving public transport; however we are concerned at the intention to devolve public transport services to municipalities, given that the Integrated Public Transport System has yet to be effectively implemented in Nelson Mandela Bay.
-Personal income tax relief to deal with impact of inflation is welcome.
-Funds generated by carbon tax and electricity levy we would like to see being directed specifically at developing and supporting energy efficiency and renewable energy programmes.
-The increases in the general fuel levy and RAF levy will contribute to increased costs in areas such as food and transport.
-With regard to funds allocated to job creation, these are all very worthy projects, however the concern is for the sustainability of these jobs once the particular projects are finished.
-We trust that the increased spending on public order and safety will translate into more effective crime-fighting and safer working and living environments.
-We remain concerned about the tax burden impact on individuals and business of the national health insurance, and await the planned discussion paper with interest.
Overall, we saw a balanced and disciplined Budget with a welcome focus on enabling economic growth, investment and job creation, and especially support for small businesses.
