Budget Reaction – Andrew Golding

News > news - 21 Feb 2008
Reacting to yesterday’s budget, Andrew Golding, CE of the Pam Golding Property Group said as was anticipated, the Minister of Finance presented a Budget which overall presented no significant surprises - with an increase in social spending and assistance, and with some form of personal tax relief for taxpayers in terms of adjusting tax brackets to compensate for inflation.

“There are positive steps being taken to boost small businesses and investment in start-up companies and junior mining exploration companies. There is also an increase in allocations to provinces to provide for improvements in education, health, welfare and housing programmes and investment in road infrastructure, agriculture, economic affairs, tourism and in crime fighting measures.

“These are all to be welcomed, and it is hoped that such funds will be spent within the allotted time frame. Also positive, although lower than hoped is the one percent reduction in the corporate tax rate from 29 to 28 percent, which is aimed at helping contribute to a lower cost of capital for new investment.

”However, the increase of 11c in the ever-rising fuel price comprising an additional 6c a litre in the general fuel levy plus 5c a litre in the Road Accident Fund Levy, coupled with the new electricity levy of two cents per kilowatt hour, will be widely felt by consumers in addition to being inflationary in themselves.

“While the R60bn government investment for Eskom to boost electricity production was anticipated, and while R2 billion is allocated over the next three years to support the more efficient use of electricity and generation from renewable sources and installation of electricity-saving measures, it is regretted that immediate tax relief could not be granted for those implementing such measures.

From a property perspective, Golding says, the decision to extend the urban development zone incentive for a further five years, thereby encouraging the private sector to play its part in the development of inner cities is welcomed, particularly as it relates to both commercial and residential development.

Also announced was that depreciation allowances for employer-provided low-cost housing will be reviewed, together with the R6 000 deductible limit, with a view to further encouraging public/private partnerships to help foster the affordable housing sector.

In addition, there is a positive albeit minor adjustment in terms of the exclusion threshold for capital gains tax increasing from R15 000 to R16 000. “We had hoped, however, to see the threshold for transfer duty on property transactions increase from the existing R500 000 in order to help foster home ownership and make it more affordable for those in the lower sector of the market.

Golding commends the Minister on the fact that South Africa has enjoyed buoyant economic growth over the past four years.

“However the fact is that our economy has slowed and consumers are feeling the pinch of higher interest rates, ever increasing fuel and food prices, coupled with the energy crisis.

“On a high note the Minister did draw attention to the Governor of the Reserve Bank, saying he is to be commended on the steps taken to combat inflation - with the forecast for inflation averaging at 4,9 percent in 2009.This would take the pressure off the South African consumer and in turn set us on a path towards a lower interest rate cycle and hopefully to long awaited single digit interest rates.”
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