The media has been jampacked with stories about the ruckus of SONA2015 and the implications for our future democracy. At Dolphin Bay, we join our voices with those of commentators calling for calm, and pointing out that the president’s address will not result in our lives, or our economy, plunging into chaos.
Steven Friedman, Director of the Centre for the Study of Democracy, observed in his February 18 column in Business Day that “as appalling as events in Parliament were, they are unlikely to affect the economy or the lives of those who harbour these fears (of chaos).”
The business world is eagerly awaiting the budget speech to be given today by Finance Minister Nhlanhla Nene, and financial commentators are waiting for this address before giving any economic forecasts. This speech will, indeed, have a direct bearing on business. We know that our government urgently needs to balance the books in order to plug its growing and dangerous deficit, and the only way to do this is through either cutting spending, to do more with the revenue it has, or by raising the state’s income through increasing personal and corporate taxes, or both. Raising VAT is unlikely, as it will have the unions up in arms.
An analysis by PricewaterhouseCoopers has showed that increasing the tax of the wealthy will yield very little return, due to the small number of higher net worth individuals. “The truth is that we need to do more to grow our economy through sustainable and profitable business, which will create a bigger tax base,” says Bertus.
“We keenly await the directive from government about how our taxes will be affected. In the meantime we urge all our business partners to take a broad perspective, taking into account the complexity of factors – rather than a single ruckus in parliament – that determine our business success.
“We look forward to discussing these issues further in our coming newsletters and provide you with our insight on how the new proposed budget might impact our industry.”