Fiscal consolidation, considered and careful tax increases and parastatal cost containment will be critical elements for a pro-poor, pro-inclusive-growth Budget for South Africa for the year ahead.
While there is a limit to what can be achieved through an effective Budget, Business Unity South Africa (Busa) is hopeful Finance Minister Pravin Gordhan will deliver a balanced Budget aimed at stimulating investment and achieving inclusive growth.
“A balanced Budget that incorporates cost containment measures with sustainable, and where necessary, limited, yet progressively designed, tax increases is the only way of sustaining the long-term government’s pro-poor, pro-growth policies, while keeping the economy afloat,” said Busa CEO Tanya Cohen in a statement ahead of the 2017 Budget speech.
Despite general acknowledgement by business that certain tax hikes are required, there is a need to keep increases to a minimum and not deter investment amid an inability to grow the economy inclusively and to create sustainable employment.
Greater efficiencies, cost containment measures and the eradication of wasteful and fruitless expenditure across government departments, as well as curtailing losses by State-owned enterprises (SoEs), will also be key.
“Business remains profoundly concerned about continued lossmaking by SoEs and applicable guarantees by the National Treasury,” said Cohen.
The “real issue” was to ensure that the economy grew adequately on an inclusive and sustainable basis, added Busa president Jabu Mabuza.
“In the last 12 months, Team South Africa has done remarkably well to hold the centre, maintain our investment grade rating, and sustain and service government borrowing. But more action is needed to pursue a stable, predictable policy and fiscal environment that stimulates investment,” he concluded.