Budget speech reaction from Chas Everitt | Everything Property

Budget speech reaction from Chas Everitt

Budget speech

Berry Everitt, CEO of the Chas Everitt International property group says there were quite a number of “positives for property” in the Budget speech delivered today by Finance Minister Enoch Godongwana. These include:

* The increase in the transfer duty threshold which means that the first R1,1m of any property purchase price is tax free. This will especially benefit and encourage first-time buyers.

* Tax incentives for households to install solar panels and businesses to invest in renewable power generation. Households will for the next year be able to claim a rebate of 25% of whatever they spend on panels, capped at R15 000. We hope a similar rebate will be introduced in future for storage batteries, which are generally the most expensive components of domestic solar power systems. Businesses will be able to reduce their taxable income by 125% of whatever they invest in renewables, without limit, for two years. This will no doubt assist many businesses large and small to stay open in the face of increased loadshedding and the rising cost of diesel for generators, and therefore help to preserve the employment they provide.

* R13bn worth of tax relief for individuals and businesses, including increased tax thresholds for personal income tax and no increases in the general fuel tax or road accident fund levy. The tax free lump sum that retirees can claim has also been increased, to R550 000. This will put more money in the pockets of consumers who are struggling with the increased cost of living and ease the financial pressure on many existing homeowners.

* The extension of the diesel subsidy for generator operation to food manufacturers which will hopefully also help to keep food price increases down.

* Increased spending on infrastructure and the implementation of many large projects that will not only provide many jobs but improve the living conditions in many towns and cities and make them more attractive to both residential and corporate property investors.

* Increased spending on the police service and anti-corruption measures, which will help over time to reduce SAs very high crime rate and the effect that has on consumer confidence and willingness to invest in local property.

* The plan to restructure and rationalise the public service, which Treasury estimates will save taxpayers some R27bn over the next three years.

However, he says, there were also some negative aspects of the Budget which will probably limit property demand and prices in the short to medium term. These include:

* Government’s decision to take on more than half of Eskom’s current debt, at a cost of some R254bn to the SA taxpayer. This is money that could otherwise have been spent on economic expansion and desperately needed job creation. As it is, GDP growth is only expected to reach 0.9% this year and average 1,4% over the next three years.

* The projected increase in government total debt from around R4,7trillion to around R5,8trillion over the next three years. This makes SA more vulnerable to external and internal economic shocks and thus less attractive to investors.

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