It’s drinks all round after South African Finance Minister Tito Mboweni’s Budget 2020 speech in Parliament on February 26 failed to deliver the expected blows to taxpayers, even if a round of (alcoholic) drinks will cost quite a bit more after additional ‘sin tax’ hikes kick in.
Of course, ‘sin taxes’ went up, but who cares in the context of a largely positive budget when we were all expecting the worst.
Against a backdrop of a tide of predictions that the VAT rate would be raised (again), in just one of a few expected tax hikes, tax relief of R14billion for individual taxpayers came as a pleasant surprise.
Mboweni’s Budget Speech appeared to signal a change of tone, with the barrel of the proverbial gun apparently now focused in the direction of the previously untouchable, the powerful and the corrupt (and various combinations of the above).
Also, there seemed to be an almost imperceptible pivot, from being very labour-focused (in service to the unions, some would say) towards employers and investors … dare I say it, business.
Not every one is a winner
Mboweni’s tricky budget-balancing act is predicated on reducing the public sector wage bill by R160.2 billion over the next three years. (Big changes, as yet not agreed to by the unions, the ANC’s very important alliance partners, let us not forget)
The Finance Minister said growth in the wage bill, which currently makes up about 38% (!) of government expenditure, had “begun crowding out spending on capital projects for future growth and items that are critical for service delivery”.
He also noted that civil servants’ salaries had grown “40% in real terms over the past 12 years without equivalent increase in productivity”.
Firepower for the enforcers
As South Africans bay (and beg) for the blood of those implicated in State Capture and the many other corruption scandals that have all-but-emptied state coffers, an additional R2.4 billion for the NPA, Special Investigating Unit and Directorate for Priority Crime Investigation is encouraging.
Mboweni said the additional firepower would “enable the appointment of approximately 800 investigators and 277 prosecutors who will assist with, among other things, the clearing the backlog of cases such as those emanating from the Zondo commission”.
Even South Africans living abroad and those mulling emigration were treated gently, when Mboweni said: “We want to encourage South Africans abroad to keep their ties with the country.”
The end of foreign exchange controls?
He said the exempt amount for foreign remuneration would be raised to R1.25 million and the “administratively burdensome process of emigration through the South Africa Reserve Bank” would be phased out.
It should be a good night in the bars and cafes in South Africa’s spending capitals, Johannesburg and Cape Town, where Budget-watchers will make the most of the ‘old prices’ tonight.
It might also be a busy one in Sydney, Auckland, London and all the other cities where large South African expatriate communities keep an eye on the scene at home, even if they pretend not to care.