Budget: First steps down the right road
Category News
Berry Everitt, CEO of the Chas Everitt International property group, says that given the current state of SA's economy, it is not surprising that there was no specific relief for property buyers in this week's Budget in the form of Transfer Duty or Capital Gains Tax adjustments, but that consumers are breathing a sigh of relief at the news that there will be no VAT or personal income tax increases this year, especially since they are facing another increase in the fuel levy and higher electricity costs.
"In addition, we really applaud Finance Minister Tito Mboweni and Public Enterprises Minister Pravin Gordhan for coming up with a creative solution to ensure that SA taxpayers don't have to pay off Eskom's entire R400bn debt. As the public, we will hopefully only have to foot the bill of R23bn a year for the next three years to ensure that Eskom reconfigures itself - under tight supervision - and is then able to pay off its own debt.
"Similarly, we were pleased with the announcement that government guarantees for the debts of other SOEs are to be more strictly enforced, and that 'strategic equity partners' will be sought where necessary to ensure that certain SOEs are sustainably managed. This indicates just how serious the Minister is about not allowing the floundering SOEs to drag the whole economy under."
The Budget also tackled two other thorny issues, he says, these being the need to fix SARS to ensure efficient revenue collection, and the need to shred the massive public sector wage bill. "As it is, there is a shortfall of about R15bn a year in tax collection, but the Minister's plans to bring back the large business unit at SARS, to create a new illicit business unit and to tackle cross-border tax evasion are encouraging. Even more so is the news that national and provincial public sector compensation will be cut by R27bn over the next three years - and that legislators will not be getting a salary increase this year.
"Such issues may not seem relevant to real estate, but they are very much so, in the sense that the real estate market can only thrive in a climate of growing confidence among investors, rising economic growth and increasing employment. We believe this Budget will set us on the right road to reach this scenario, and in the meanwhile we welcome the R3,7bn allocation made to assist emerging farmers to acquire land, and the R950m allocated to a new subsidy scheme for first-time buyers.
"These measures mean that the number of new property owners will continue to grow even in these tough times, and that more South Africans will gain access to the personal wealth creation potential of land and home ownership."
Author: Meg Wilson