The South African Chamber of Commerce and Industry (SACCI) has welcomed the 2018 budget speech presented by Finance Minister Malusi Gigaba in the National Assembly on 21 February 2018.
“While this was a budget announced during very tight economic times with low growth, an adverse credit ratings environment and high debt to GDP and deficit rates, we believe it was a balanced act under the circumstances,” said Alan Mukoki,SACCI Chief Executive Officer.
Mukoki said the 52 cents per litre increase in the levies on fuel is likely to have a negative inflationary effect, which will put many businesses on the back foot, given the fact that fuel is a high input cost in many businesses.
“Many consumers and employees will be adversely affected by this high levy, which will be coupled with a 1% increase in value-added tax (VAT). The 1% increase in VAT may appear marginal, however, the knock on effect will impact revenue growth in many businesses and this is something that South Africa should watch closely,” said Mukoki.
In his Budget Speech, Gigaba announced a 52 cents per litre increase in the levies on fuel, made up of a 22 cents per litre for the general fuel levy and a 30 cents per litre increase in the Road Accident Fund levy, effective 1 April 2018.
He also announced an increase in the VAT rate from 14% to 15%.
Mukoki said the fund allocation of ZAR2.1 billion to the development of small businesses and start-ups was too small, given the fact these enterprises are the only hope for the creation of jobs.
“We believe an amount in excess of ZAR10 billion would have been more appropriate in our context,” said Mukoki.
Gigaba announced that a fund with an allocation of ZAR2.1 billion over the medium term is being developed between the Departments of Small Business, Science and Technology and National Treasury to benefit small and medium enterprises during the early start-up phase.
“This is an area that has historically had limited support because of the risks involved. By enabling new businesses with new ideas to emerge and thrive, we are radically transforming patterns of production in the economy,” said Gigaba.
SACCI welcomed the pledge by the Gigaba to pay suppliers on time, saying it is an urgent and necessary step.
Minister Gigaba said National Treasury will issue a directive to all government departments and public institutions instructing them to pay suppliers within 30 days.
SACCI also welcomed the Minister’s decision not to increase taxes on corporate tax and personal income tax.