Budgets used to be fun
Years ago, in our dark apartheid era, the annual budget speech from the Minister of Finance had something of a carnival atmosphere about it. The larger stockbroking firms would try and secure a live link up to the then M of F (Barend du Plessis) and invite clients around to listen to various experts discuss the budget and its implications. The best party in town by far used to be the one held by stockbroking firm Frankel Kruger.
They never failed to get hold of the M of F in addition to the governor of the Reserve Bank and to have a summary of the main points of the budget printed out and ready for their clients almost as he stopped speaking. Then it was off to the senior partner's sprawling house in the northern suburbs for the evening where a vast marquee complete with dining tables would be laid out. Needless to say the food and drink flowed, particularly if you happened to be a cherished client of the company.
Businessman Derek Keys succeeded Barend du Plessis in the run up to the 1994 election as a calming influence aimed at jittery foreign investors. Then, in 1996, Trevor Manuel took over from another caretaker M of F, Chris Liebenberg (who had been appointed by Nelson Mandela despite his lack of political affiliation), and famously kicked off his long and distinguished term of office with an unfortunate remark about "amorphous markets".
Despite the faltering start though, a Manuel budget speech was always a treat to listen to and in the earlier days of his term of office there was generally something worth discussing. Pundits would be invited to radio and TV studios to chew over the budget, daily newspapers would run budget specials and there was generally enough meat left on the bone to fill a tongue in cheek column in a Sunday newspaper.
Sadly, those days are gone. A few years ago I was invited onto a TV programme to "unpack" the budget speech and declined the offer because there was little room for the minister to manoeuvre which suggested that there would be very little, apart from the rather tedious "sin" taxes, to discuss. Any tax relief there may be would be minimal and hardly worth getting excited about.
Since this column is being written before the budget speech and being read after it I'm in no position to comment on what happened in parliament yesterday. But I'm prepared to bet that there won't be much celebrating among the more economically active members of society. Since we are the only people creating wealth in the country we are the obvious targets for a government hell bent on buying victory at the next election.
No doubt all sorts of worthy projects and uses for our money were trotted out yesterday but they will all cost money and, since the government has no money of its own, that means you and I have to stump up. The snag is that Pravin is running out of options. Income tax payers are a minority group in South Africa and common sense tells you that there is only so much tax an individual can stand.
Our chief problem is that, while the minister of finance may understand this, very few of his parliamentary colleagues appear to be able to grasp the fact that heavy taxes run the risk of killing the goose that laid the golden eggs. Worse though, the rank and file members of the ANC have been encouraged to believe that anyone with a job or a business is "privileged" and should therefore be punished. The best way of punishing these "privileged" people is to hit them where it hurts most...in the pocket. So a variety of taxes to transfer money from the privileged to those more deserving have been devised.
I've recently bought a property in Stellenbosch and in addition to the transfer duty I paid Pravin for having the impertinence to buy a new home I also have to pay a large whack of capital gains tax on the equity portfolio I liquidated to pay for the property. This is an appallingly iniquitous tax. If I decide that I want to put my life savings into a company that will create jobs in South Africa and contribute to the economy I am punished if that company does well and the share price rises.
The risk is all mine of course and if I happen to make money the government wants a sizeable percentage. But if I lose on the investment the government has no interest in sharing in the loss and reducing my tax burden.
In future we must expect budgets to become even more invasive and there's precious little we can do about it. What is so tragic is that so much of our taxed income disappears through corruption or gets frittered away on dodgy projects. At some point the system will fall apart.
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