Straightening up of budget

Disclaimer: Please note that this article is at least 12 months old.
Any information herein was accurate when published on 18 February 2008

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This year, all we will see is a "straightening up" of the budget as Finance Minister Trevor Manuel does not have much leeway," predicts Graham Earle, director, BDO Spencer Steward (KZN) Inc.

Earle hopes that Manuel would give more to pensions and promote education within business to further the education of employees. He also foresees an increased forex level as the economy is slowing down, and he would like to see an incentivised structure for BEE.

The winners of the 2008 Budget would again be the lower earners and the retirees, and there would not be any losers unless one drinks or smokes. No one would be especially hard hit, he believes.

Earle's wish list for Trevor Manuel would include a reduced tax rate for small businesses, the promotion of education within companies and bringing down the maximum rate for individual tax.

"The complexity of the Tax Act is a cause of concern, especially the Capital Gains Tax, as it is hurting a large number of tax payers and many do not understand it," says Earle.

According to Earle the macro issues affecting the current financial policy are the petrol price, which has increased inflation. The increased inflation has in turn led to a downturn in the economy. This does not bode well for the economy as it could lead to an increase in unemployment and crime. More skilled people are also leaving the country, which the country can ill afford. More should be done to retain skills.

The property and construction sector has had a good run, but is also starting to slow down. Bad debt is having an effect on the cash flow of companies and with the weakening of growth more retrenchments could be on the cards.

Earle is of the opinion that international pressures are not having much of an effect on the economy as the pressures are more of an internal nature, specifically electricity load shedding which has a hugely detrimental effect on business.

Disclaimer: Please note that this article is at least 12 months old.
Any information herein was accurate when published on 18 February 2008