Why budget rings alarm bells

PLAN TO PLUNDER COUNTRY’S MOST SIGNIFICANT CURRENCY BUFFERING FUND Govt should incentivise conglomorates by offering tax benefits, says High Street Auctions director.

High Street Auctions director Greg Dart says this year’s budget speech by Finance Minister Enoch Godongwana is ringing alarm bells for the economy and investor confidence. “The only sustainable way to broaden a nation’s revenue base is to build a vibrant economic environment that offers stability, supports job creation and invites investment,” he says.

“That’s the recipe for sustainable growth. Shortcuts like imposing a global minimum corporate tax into an already unattractive economic proposition is short-sighted and shocking.

“A minimum tax rate of 15% on multinationals with annual revenue exceeding €750 million (about R15.6 billion) who want to invest in South Africa, is tantamount to waving a banner that says ‘spend your money elsewhere’.

“The government should be incentivising conglomerates by offering tax benefits, not imposing a punitive tax on their global revenue.”

Dart says the government’s plan to plunder the country’s most significant currency buffering fund is also profoundly disturbing.

“The Treasury’s Gold and Foreign Exchange Contingency Reserve Account (GFECRA) is the thin line that protects us from economic freefall as the value of the rand goes downhill on global markets.

“Yes, the country’s debt exposure of more than R500 billion is dangerously high, but it was the government’s recklessness that created this mess in the first place,” says Dart.

“Why compound the error by even more recklessly draining the GFECRA of R150 billion, which will only offer a short-term solution to our sovereign debt problem, but risk our currency exposure and potentially plunge South Africa into a downward spiral that could break the economy.”

Long-term economic growth

Dart says the general election on 29 May must move the political needle towards policies that support long-term economic growth.

“[The year] 2024 is a make-or-break year for South Africa,” he says.

“The new government must prioritise solutions for the power grid and infrastructure collapse that is the current legacy of state-owned enterprises.

“Without electricity or ports and transport networks, there’s literally no light at the end of the economic tunnel.”