Finance
minister Pravin Gordhan is widely considered to be a sound fellow who
understands the budgetary process and fights theft and corruption, but
nevertheless he is a member of a socialist government infested with communists
and unshaken in the belief that politicians know best how to spend everyone’s
money. The budget he presented this week seems to have passed a watershed in
the expression of this belief. It has substantially ramped up the confiscation
and punishment aspects of state revenue collection with savage attacks on
capital, whether the so-called white monopoly kind or not.
The headline
grabbing increase of the income tax marginal rate to 45% is expected to collect
an extra R4.4bn from the just 103 353 taxpayers who have an annual income more
than R1.5m. Provided a few of them are prepared to stand on the grass, this tiny
group could fit into a football stadium, which dramatically illustrates the
flimsy nature of our tax structure. The total income tax contribution of these amazingly
few successful souls is around R127bn, which is more than a quarter of the
budgeted amount from that source! It’s worth remembering that almost half of
the 14m registered individual income tax payers contribute zero because their
income is below the tax threshold. They do not of course escape the many other
levies and duties and taxes.
Getting
rather less coverage is the 33% increase in the withholding tax rate on
dividends. This is just the latest tightening of the screws on those who have
savings to invest. A decade ago the 10% Secondary Tax on Companies (STC) was
commuted into a Withholding Tax on Dividends and increased to 15%. Since
Wednesday that rate is now 20%. Most companies conveniently “forgot” to pass on
the benefit of this change to their shareholders who were now responsible for
paying the impost and post-tax dividend flows were severely impacted. It has
now got even worse.
The Budget
also confirmed that taxes on carbon and sugar are on the way and that the VAT
rate of 14% may not be as sacrosanct as imagined. Make no mistake our
government are desperately looking for sources of income and if anyone could
find a way to tax oxygen they would be all over that idea in a flash. But the
real threat to our nation is the totally out of control corruption, theft and maladministration
that results in inappropriate and fruitless expenditure.
Events around
the campaign to replace Gordhan because he is “insensitive to the needs of the
people”, are hotting up. A compliant and corrupt buddy of JZ has been
fast-tracked onto the reserves bench. But it reveals that the campaigners have
no idea how state finance works nor what a parlous condition ours is in. National
Treasury is not a serene haven of cash-filled vaults ripe for looting. Almost
every cent that it handles has a destination agreed to by Cabinet. It’s called
the Budget. This defines exactly where Treasury must next year allocate an
average of R6bn every working day. It also forecasts that SARS will collect on
average of less than R5bn a working day. So, another Treasury task is to find
out from the Reserve Bank regularly if the shortfall has been borrowed and at
what cost. Meanwhile the switchboard is alight with calls from the likes of SAA
and Eskom asking for a bit to tide them over. And now, arbitrary mendicants claiming to
represent the people and clutching a chitty signed by Number One plan to knock on
the front door and be handed a bag of dosh. The first (and only) question any Finance
Minister should ask before turning them away is: From which account do they
propose diverting their own pay-out? Perhaps
National Treasury should keep at reception copies of a map marked with the
location of the various Ministries so that prospective budget looters could
more easily locate the civil servants to explain to them why they won’t be paid
this month.
Just roll
over and get a few more minutes doze and you’ve missed the cricket from NZ.
These time zone thingies are unfriendly. But it does mean that the lengthy 2017
Super Rugby season is now underway before our own weekend begins. Nevertheless,
the format does create a ridiculous calendar with many Saturdays offering 7
matches back to back. Good for sports bars. Poor for marital relations.
James
Greener
Friday 24th
February 2017
