Minister Pravin Gordhan must be one of the finest finance ministers
anywhere on the planet. He is probably the best that this country has ever had.
He is startlingly free of any political waffle and spin. His budget this week
was undoubtedly savage but undeniably focussed on where the money is. Unsurprisingly
the writer and the readers of this letter are among his targets and are now
dolefully contemplating a future where we will all pay more tax and try to
drink less booze. Minister Gordhan appears
to be unaffected by the ranting redistribution rhetoric of his colleagues and
simply accepts that only some people can afford to contribute but that
encouragingly that cohort is growing. He may be a tad naïve, however, to claim
that SA’s culture of tax compliance is way better than “the Mediterranean
nations”. His intelligent and pragmatic
approach must drive the majority of his keen communist cabinet colleagues into a
frenzy bit as he explains that one can’t simply loot the bank account of anyone
suspected of being too rich.
Nevertheless he has arranged for them to be able to spend over one
trillion rand in the coming year and on
his own numbers this means that the state will occupy an alarming and record-setting
32.1% of the country’s economy (as measured by GDP). This is the bit that I
really don’t like; especially when you see that he expects to collect in tax
only R85 out of every R100 that his colleagues will get through. The balance
will naturally have to be borrowed and in the coming year the interest bill on
all the state’s loans amounts to R89bn which after the R152bn earmarked for Basic
Education is the second largest single category of expenditure.
The budgeted borrowing amount almost exactly matches the so-called Social
Protection department expenditure of R158bn. Social Protection is the kindly
phrase used to describe grants to the aged, the disabled, the military veterans
and the child bearers and carers. This “hand-out” of 17.5% of the tax take is a
thorn in many a side but it appears that this is the only idea that the government
has for eliminating poverty. It is not a very good or effective one.
So far the impact of the budget on the stock market has been
surprisingly benign despite several unfriendly imposts, including increasing
the dividend tax by half just before it is implemented. The Capital Gains tax
increase and the forthcoming changes to the Securities Transfer Tax will
definitely reduce many investors’ desire to trade. Is there any industry which
these darn socialists do not want to control and set prices for?
The number of good and very good company results among the flood
that were announced this week easily outweighed the poor and the disappointing.
The skills that are being put to work keeping
industries and jobs ticking over and even increasing in these tough times are
awesome and praiseworthy. Just imagine what would happen if those managers and
owners did not have to spend so much time filling in forms, ticking boxes and
hosting inspectors looking for nits to pick. Absent the cold and clammy hand of
bureaucracy and things would fly so much faster and further. Unless of course
you are the state owned airline which its Minister claims deserves more state
support because “SAA operates in a very competitive and liberalised
environment”. If that is sufficient reason to get ones hot and sticky paws on
public loot then where does the queue start please minister?
At R6.4bn the recreation and culture expenditure vote is one of the
smallest and yet the politicians and bureaucrats who feed at that particular
trough are able to cause considerable damage and unhappiness. The conference
schedule for the suits is long and punishing and little money is left over to
support the actual players and performers. The SA women’s hockey team is
surging brilliantly towards Olympic qualification but any second now some functionary
will begin to fret about them being non-compliant with some charter or other. I
don’t know how much of that budget is allocated to the fools who believe that
race defines sporting proficiency, but you would think that season tickets to
the Lions at Ellis Park would buy them off.
James Greener
24th February 2012
