To my mind

Finweek English Edition - - Letters - BY RIKUS DEL­PORT rikusd@fin­week.co.za

ONE ONLY NEEDS to watch the body lan­guage of Fi­nance Min­is­ter Trevor Manuel dur­ing his Bud­get speech to re­alise that it’s not only the State cof­fers that are over­flow­ing, so is his self-con­fi­dence. The one prob­a­bly stems from the other and he de­serves credit for it. Af­ter all, he’s man­ag­ing the State’s fi­nances bet­ter than any of his pre­de­ces­sors. The dan­ger, how­ever, is that too much self-con­fi­dence could lead to com­pla­cency. Dur­ing the past cou­ple of years, Manuel’s per­for­mance could hardly be faulted. He made all the right moves and pushed all the right but­tons. This year was no ex­cep­tion – the scur­ry­ing around of op­po­si­tion spokes­men on fi­nance try­ing to find some mean­ing­ful crit­i­cism of his Bud­get speech is clear ev­i­dence of how dif­fi­cult it is to fault him. His achieve­ment, cou­pled with the charm that he can turn on at will, has even the cyn­i­cal me­dia eat­ing out of his hand. We’re not say­ing this to de­tract from any of his achieve­ments. But if some­one be­comes ac­cus­tomed to never be­ing ques­tioned, or if there aren’t enough checks and, bal­ances built in to keep him on his toes, he could eas­ily be­come over­con­fi­dent. We feel that one of the main rea­sons for Manuel’s suc­cess is that as a vir­tual un­known, he ini­tially had to prove him­self. He did so by sur­round­ing him­self with ex­perts and, through hard work, es­tab­lished the best-run min­istry and de­part­ment in Gov­ern­ment. But this healthy state of af­fairs will only en­dure if those in­volved sub­ject them­selves to crit­i­cism – which has ap­par­ently thus far not been a prob­lem. How­ever, there could well be a prob­lem if those who are sup­posed to be crit­i­cal are not or don’t have the ex­per­tise to ques­tion. That’s why MPs have a ma­jor re­spon­si­bil­ity – par­tic­u­larly op­po­si­tion MPs – to com­ment on cru­cial eco­nomic and fi­nan­cial mat­ters. But those same MPs are of­ten the party lead­ers and there­fore un­for­tu­nately not the real ex­perts on the sub­ject. The re­sult is that those in­volved are of­ten not called to book. And this is also true of the me­dia, with their im­por­tant watch­dog func­tion. They have an im­por­tant role to play, but of­ten shirk their duty in this re­gard. There have been re­ports that Manuel can be in­tol­er­ant, but thus far we haven’t seen much of that – per­haps pre­cisely be­cause he has never had to come up against harsh crit­i­cism. Un­til such time, we’ll have to ac­cept that our Fi­nance Min­is­ter isn’t eas­ily of­fended. AF­TER last week’s Bud­get ad­dress, con­trib­u­tor Howard Preece pub­lished an in­ter­est­ing re­port on our web­site, Fin24. From this it ap­pears that Gov­ern­ment now col­lects just as much tax from com­pa­nies as from in­di­vid­u­als. In the 2000-2001 tax year, the sit­u­a­tion was still quite dif­fer­ent, when the di­rect tax rev­enue from in­di­vid­u­als was about R86,5bn, while com­pany tax came to only R29,5bn, which, even with STC of R4bn, was con­sid­er­ably less. Ac­cord­ing to the 2007 the pic­ture has changed a good deal, with per­sonal in­come tax ac­count­ing for about R139bn, while com­pany tax at about R115bn and STC of R17bn are roughly equal to it. This tax trend is com­pletely out of line with the rest of the world. Economists feel it’s bet­ter to en­cour­age job cre­ation and man­u­fac­tur­ing, while spend­ing should be re­duced. The ideal is there­fore higher in­di­rect tax, like VAT, with the aim of bring­ing re­lief to the poor, and lower tax on in­come, es­pe­cially for com­pa­nies. Now that the Fi­nance Min­is­ter has an­nounced that he’s go­ing to re­duce STC and later do away with it com­pletely, the time has per­haps come to look at a bet­ter tax and reg­u­la­tory en­vi­ron­ment for com­pa­nies in SA in gen­eral. week Fin- Bud­get Re­view,

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