Mixed bag of for­tunes, hits and misses

Financial Mail - Investors Monthly - - Budget 2017 - Marc Hasen­fuss

The mar­ket took the 2017 bud­get speech in its stride — even though the pro­posed hike in with­hold­ing tax on div­i­dends to 20% might have irked in­vestors.

The JSE all share in­dex firmed slightly af­ter the read­ing of the bud­get speech — though it still fin­ished the day down. On the cur­rency front, the rand weak­ened slightly against the dol­lar.

Ash­bur­ton In­vest­ments port­fo­lio man­ager Wayne McCur­rie says there were no sur­prises in that tax hikes were largely ex­pected. “What was un­usual was the tax in­crease on peo­ple earn­ing over R1.5m a year. We ini­tially thought it would come in at 43%, and not the pro­posed 45%.”

McCur­rie says that over­all the bud­get speech sent out the right mes­sages. “It will be well re­ceived by the mar­ket and rat­ings agen­cies.”

Rem­gro CEO Jan­nie Du­rand be­lieves fi­nance min­is­ter Pravin Gord­han made the best of a dif­fi­cult sit­u­a­tion. “Hav­ing to com­mit to a high per­cent­age of so­cial spend­ing in an econ­omy that is not grow­ing is dif­fi­cult. It was a case of damned if you do, damned if you don’t.”

Du­rand ar­gues that the de­ci­sion not to in­crease the Vat rate meant a con­tin­u­a­tion in the con­cen­tra­tion of the tax bur­den on a sec­tion of the pop­u­la­tion. “This is a bit of a con­cern . . . high earn­ers are of­ten very mo­bile.”

Re­tail ty­coon Christo Wiese — whose ma­jor share­hold­ings in­clude re­tail gi­ant Sho­prite, in­ter­na­tional con­glom­er­ate Stein­hoff and in­vest­ment group Brait — says at first glance there was noth­ing re­ally neg­a­tive in the bud­get speech, which re­it­er­ated Pres­i­dent Ja­cob Zuma’s call for rad­i­cal eco­nomic trans­for­ma­tion.

He says gov­ern­ment needs to un­der­stand that peo­ple who are per­ceived to be “well off” have no dif­fi­culty in mak­ing fair con­tri­bu­tions, and in dif­fer­ent ways, to en­sure a bet­ter life for all. “We all agree that more money needs to be spent on ed­u­ca­tion. But the output is dis­mal . . . de­spite gov­ern­ment spend­ing on ed­u­ca­tion be­ing one of the high­est pro­por­tions of GDP in the world.”

Con­sid­er­a­tion should be given to al­low the pri­vate sec­tor to play a big­ger role in de­liv­er­ing qual­ity ed­u­ca­tion.

“Such an ini­tia­tive would save gov­ern­ment money while en­hanc­ing qual­ity of output,” Wiese says.

Christo Wiese

Wayne McCur­rie

Jan­nie Du­rand

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