High Street Auctions Director Greg Dart says history is likely to remember the Budget Speech 2023 as the South African economy’s biggest “good news, terrible news” event of the year.
“Starting with the good, Finance Minister Enoch Godongwana’s announcement of radical tax incentives for businesses investing in sustainable energy infrastructure is very likely going to be the lifeline needed by numerous sectors that are at the brink of collapse.
“Businesses being able to deduct 125% of the cost of wind, solar, hydropower and biomass projects in the first year – with no limits on how much can be claimed, nor how big the project is – will incentivise the private sector to reprioritise its short-term capital expenditure.
“The positives for the private sector are two-pronged; easing trade and industry’s risk exposure from the crippling effects of loadshedding, and being able to claim back in tax 25% more than the infrastructure spend itself, which will provide much needed relief to business budgets.
“And although the household tax rebate for investment in solar panels over the next year is smaller at 25%, every bit helps.”
Dart says other very welcome positives for consumers include no personal income tax hike, the annual tax-free threshold for workers increasing to R95 750 and the tax brackets for transfer-free property transactions increasing by 10% to R1.1 million.
“That said, we can’t ignore the ‘terrible news’ part of the budget, which could set our economy as a whole on a devastating path.
“As distasteful as an Eskom bailout might be to South Africans given the history of blatant maladministration and corruption that got us to the point of 207 days of loadshedding last year, it is a necessary evil.
“Godongwana’s R254 billion government bailout for the failing SOE would be acceptable – if it wasn’t planning to hand Eskom R184 billion over the next three years to ‘settle loans’.
“To call this ‘alarming’ would be the understatement of the decade. That R254 billion belongs to the people of South Africa, and the responsibility for ensuring that the funds go where they’re intended should remain with the Treasury.
“Handing R184 billion directly to Eskom is tantamount to paying the fox to keep the henhouse safe.” Dart has urged the Finance Minister to rethink the bailout.
“The government’s total debt has now reached almost R5 trillion – while it earns less than R1.7 trillion in tax a year. The cost of paying off its debt is now the budget’s fastest-growing line item, with a debt service spend of more than R360 billion a year.
“The Treasury needs to make every cent count. Giving R184 billion directly to Eskom is throwing good money after bad.”
