Busa’s got beef with the budget
Business Unity SA (Busa) told Finance Minister Pravin Gordhan that his announcement around the planned carbon budget system in the Budget Review was “problematic”.
The business body also has concerns that “credible cost-benefit analyses” are needed on the planned National Health Insurance scheme, social security reform and the nuclear build programme.
At a feedback session at the National Economic Development and Labour Council (Nedlac) after the budget speech, Gordhan and his officials got into a war of words with the Black Business Council (BBC), the other organisation that was representing business at Nedlac.
At the same meeting, Busa gave a presentation, which City Press has seen.
Busa agrees with only one item on the BBC’s list of complaints about the budget: the new higher dividends tax.
“After accounting for corporate income tax [paid before the distribution of dividends], the combined statutory tax rate on dividends is now more highly taxed than the Organisation for Economic Cooperation and Development’s average equivalent measure, which may have unfortunate ramifications in limiting investment appetite,” said Busa in the presentation.
The BBC also expressed concern about the higher dividend tax because it would affect a major channel through which BEE deals are financed.
Busa did, however, have a handful of separate criticisms.
Treasury is getting ready to put a revised Carbon Tax Bill before Parliament in “the middle of 2017”, but will only finalise a policy on how the carbon tax will align with carbon budgets at the end of the year.
Busa said it “notes with concern ... that government only expects to provide clarity at the end of this year on the alignment of the carbon tax and carbon budget after 2020”.
“This is problematic as we are currently commenting on a document from government on the national mitigation system, which includes alignment between the carbon tax and the carbon budget system,” said Busa.
Busa CEO Tanya Cohen said the organisation wanted certainty that there wasn’t any “policy misalignment” on the major pending tax and ancillary mechanisms.
A carbon budget is an emissions target that determines the rate at which companies and the country as a whole must reduce emissions.
The earlier carbon tax policy gives companies cooperating with the planned national carbon budget system an allowance they can subtract from their carbon tax.
Busa also fretted about the costs of major planned improvements to the South African social safety net.
“We continue to advise caution in government’s policy announcements with significant future expenditure commitments, such as the National Health Insurance scheme, comprehensive social security and the nuclear build programme.
“Credible cost-benefit analyses must be undertaken as a part of any consideration of fiscal commitments now and in the future.”
Treasury spokesperson Yolisa Tyantsi wasn’t able to respond to City Press’ request for comment on Friday regarding Treasury’s response to Busa’s criticisms.