Budget gets approval, also kicks

‘Easy’ sectors repeatedly targeted

FINANCE Minister Malusi Gigaba’s national Budget speech delivered on Wednesday was largely welcomed by the markets and South Africa in general, save for a few key contributors to the country’s gross domestic product.

Apart from parts of the tourism sector expressing disappointment with the funding for small businesses, the Cape Master of Wine, Ivan Oertle, was not impressed with the government’s idea of “unabatedly” raising so-called sin tax, and WWF South Africa feels the R6 billion allocated to disaster relief should be channelled towards long-term solutions that help South Africa to adapt to a “new normal” under climate change.

The government has set aside a provisional allocation of R6bn this year for several purposes, including drought relief and to augment public infrastructure investment.

Senior manager: freshwater at WWF South Africa, Christine Colvin, explained that this meant spending money on climate-smart, water-resilient infrastructure in particular.

“We wholeheartedly support the idea of the Working for Water Programme being extended and absorbing some of the agricultural jobs that have been affected by the drought.

“In particular, we are heartened by the recognition of the need for new fiscal and regulatory measures to improve water resource management,” said Colvin.

South Africa can at times be a very reactive country, “meaning we seem to wake up very late on critical issues”, said Brett Hendricks, general mager of the Thebe Tourism Group.

Hendricks said while we had heard about the scarce resource that is water, we waited until water restrictions in the Western Cape were at level six before making impactful changes.

“Thanks to good communication, for example, residential usage has now dropped to 523 megalitres a day – a vast difference to the 1130 megalitres a day recorded in 2014,” he said.

For the tourism industry, according to Hendricks, it is about communicating to visitors that Cape Town remains open for business. “Tourists are hearing the correct messaging around water from the moment they arrive till the time they leave, ensuring the impact remains low. However, they should know this before they arrive.”

He said the truth of the matter was that the drought in South Africa would have an impact on the economy. “We must also remember that the water crisis is not limited to the Western Cape, with the Eastern and the Northern Cape worst hit by the drought. We need to address this at a national level.”

Delivering his budget speech Minister Gigaba also announced increases in alcohol and tobacco excise duties of between 6% and 10%.

Oertle said this increase was expected by the industry to be closer to 10 percent each year as the sentiment of the government on these issues and how it was handling the liquor legislation indicated that it was solving the problem by making more revenue out of it instead of addressing the underlying issues.

“The same easy revenue making areas are being targeted repeatedly by the government. The only positive take on this for us is to make sure we drive a quality agenda and so enabling wineries to reach higher price points which are not so impacted by excise.

“In short, the government’s higher increase on alcohol drives a premium agenda and has a negative impact on disposable income of the lower and middle-class consumers which is not a good thing for the wine industry in general,” he said.

On sugar tax Oertle was equally scathing: “In a general same way of going about it, the masses drink coke and carbonated soft drinks, which will cost the masses, including mostly poor people, more per litre.

“My question is: Will the government use this sugar tax to address the diabetes problem in South Africa as a result of driving sugar sales and promoting sugar as ‘energy’ for decades?”