2021 Budget Speech commentary

2021 Budget Speech commentary

Private Property South Africa
Press

Berry Everitt, CEO of the Chas Everitt International property group, says: “Although it was short on detail, we applaud Finance Minister Tito Mboweni for tabling a ‘hopeful’ Budget rather than an austerity plan, and for his continued commitment to fiscal discipline and consolidation.

“This resolve has clearly been complemented by a rejuvenated SARS, which has managed to collect more tax than expected for the 20/21 fiscal year and saved SA households from the R40bn increase in personal taxes that was mooted in October.

“In fact, the personal tax brackets are now being raised by 5%, so hard-hit consumers will actually receive some R2,2bn of tax relief this year, which will hopefully go some way to reduce the effects of the 15% increase in Eskom tariffs that was recently approved, and a sharp rise in petrol and diesel prices as a result of a fuel levy increase of 15c a litre.

Another win for consumers is the extension of the Covid-19 special assistance grant for the poorest households until the end of April, while the increases in pensions and child grants will no doubt help many others to survive the dire effects of the pandemic.

He says it was disappointing that there was no decrease in the corporate tax rate, especially since so many private companies have done so much over the past year to assist their own employees and support various charity organisations in the provision of food, water and shelter to the poor and unemployed.

“However, it is encouraging that SARS does have a plan to lower the rate from the current 28% by broadening the corporate tax base over the next few years – and the R4bn allocation in this Budget for the development of new small and rural businesses is also good news. Encouraging and growing this type of enterprise in all sectors of the economy is, we believe the only real answer to SA’s mounting unemployment numbers.”

From a real-estate perspective, Everitt says, the most important single item in the Budget currently is the R10bn allocation for the purchase and distribution of Covid-19 vaccines, “which we all know need to be administered as fast and efficiently as possible if SA is to achieve any real measure of economic recovery in the next 12 months.

“Property and construction and all the downstream sectors are of course vital to the economy as significant job creators, but we also need people to have jobs in order to keep purchasing and investing in real estate. And that is not going to happen unless major private investors, foreign and local, have enough confidence in SA’s post-Covid economic stability to put their money into the major Public-Private Partnership projects envisaged by the Minister and the President in his recent State of the Nation Address. “For this reason we also believe the Government urgently needs to provide much more clarity and detail with regard to its plans for failing SOEs like Eskom, the proposed expropriation of land without compensation legislation, and the three-year public sector wage agreement that is currently being negotiated.”

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