This morning, the All Share index failed by just 17 points to burst
above 41 000. This bull is alive and well and determined to take charge. Buyers
are loading up, unconcerned that sellers are demanding and getting ever higher
prices. Is there no news that might cause pause or caution? Or is it that being
invested in shares beats keeping your cash just anywhere else? It’s this latter
reason I think. It certainly makes a mockery or trying to make prudent and
sensible stock decisions. Just close your eyes and buy!
Suddenly its budget time again and it feels as if there has been a moratorium
placed on cabinet ministers making foolish statements. Are we being prepared
for some really bad news? As pointed out last week, the revenue collections are
slipping ever further behind the spending programs so the need to find some
extra sources of significant cash through taxes is very pressing. Forecasts
that Minister Gordhan is going to soak the rich also correctly point out that this
would not raise a great deal of money. Reportedly there are just 2 500
taxpayers whom the tax man thinks are really rich. If they each chipped in an
extra R1m of tax a year that’s a mere R2.5bn which on current form the lads and
lassies at National Treasury would whistle through in less than a day and a
half. However, at least one talking head
feels that targeting the rich is still a good idea because it would “creat(e) social cohesion and improv(e) the integrity and
morality of the tax system. It is politically the right thing to do.” Well
that’s certainly debatable. Isn’t the tax system in place in order to raise
money and not to make everyone glow with civic pride? Data shows that like many
nations, our budgetary problems lie largely on the expenditure side. The
country simply can not afford a government with so many unproductive employees on
its payroll, nor supply so much in handouts to the needy. It is indeed a
terribly difficult dilemma and perhaps explains why wise people don’t enter
politics and attempt to resolve it
Here in the investment industry, already every activity we do
(buying, selling and collecting income) attracts a tax of one sort or another,
so can we hope to escape the net this time? Probably not. Socialists just love
trying to modify behaviour of which they disapprove (in this case trading for
profit) with taxes and levies that make no sense. Muttering has been heard
about a change to the buying tax. This is alarming and if enacted would substantially
threaten liquidity on the JSE in return for a relatively miniscule income. The infamous
plastic bag levy is a great example of this type of foolish legislation. It
collects a trivial amount of money, which disappears into the general revenue
account – at some unknown national administrative cost – and still trees and
fences are festooned with the discarded bags and packaging.
It’s alarming to see hints that Eskom may be slipping back into the
fantasy realm of thinking that small coal producers armed with a wheelbarrow
and two shovels can make a contribution to the coal supply needs of the giant
utility. However laudable and understandable supporting small entrepreneurs might
be, the fact remains that their customer is a heavily populated country reliant
on large extractive and manufacturing businesses who simply can’t tolerate
disruptions to the power supply. I wonder what truth there is to the rumour
that the last time we suffered rolling blackouts (aka load-shedding) due to
similar mishandling of coal supplies, Eskom board members and executives were
fitted out at state expense with emergency diesel generators.
Even if this weekend’s Midmar Mile swimming event is the most
appropriate sport for the current weather, local rugby kicks off this weekend.
The match of greatest interest to me will be the showdown between the Lions –
relegated from the Super 15 -- and their replacement the Kings, from my home
province in the Albany Thickets. This could get nasty.
James Greener
8th February 2013
