Finance Minister Enoch Godongwana faces the challenge of balancing South Africa's budget while fostering economic growth.
Image: Independent Newspapers
Finance Minister Enoch Godongwana has a responsibility to prioritise pro-business growth in tomorrow’s Budget Speech.
This sentiment comes from Andrew Bahlmann, the CEO of Corporate and Advisory at Deal Leaders International.
The expert said that balancing South Africa's national budget must also include tax policies that stimulate economic growth without sacrificing essential public services.
“South Africa’s government, like many others, can often be inefficient in how it allocates funds. This includes high administrative costs, duplicated programmes and inefficiencies in state-owned enterprises (SOEs). These inefficiencies are prime candidates that I would target for budget cuts, with a start being reducing the number of municipalities and even provincial governments,” Bahlmann said.
He said that Godongwana needs to reduce the financial burden on taxpayers by cutting funding to loss-making state-owned enterprises like Eskom, Transnet and South African Airways (SAA).
He called on government to focus on privatisation or public-private partnerships (PPPs) and that could free up significant funds.
“It may seem easy to cut investment in infrastructure, but this is the last thing I would do if the objective is to create jobs and get people off state grants. I would direct more government spending toward critical infrastructure projects, such as roads, ports and digital infrastructure,” Bahlmann added.
The CEO said that these investments create jobs and enhance the business environment by improving logistics and communication.
Bahlmann said that he fully supported a multi-billion rand investment in the South African Revenue Service (SARS).
He was referring to the proposal to give SARS an additional R3.5 billion to improve collection rates.
“While it may seem like a sizable amount, it is a smart, long-term strategy. Improving the efficiency of tax collection without raising tax rates can significantly boost revenue,” he explained.
“South Africa has a large informal economy, and many taxpayers underreport or evade taxes. By strengthening SARS’ capacity to track down evasion and improve collection systems, this investment will likely result in a higher tax base and better compliance, ultimately generating more revenue for the government.”
Bahlmann called for more investment in South African skills development.
“Investing in education and vocational training would better equip the workforce with the skills needed in a rapidly changing global economy,” he added.
“I would thereafter prioritise fiscal discipline through expenditure control while ensuring that tax increases are minimised, with a focus on ensuring that government policies remain conducive to business growth and attracting investment,” Bahlmann said.
Lastly, he said that Godongwana needs to find the right balance between fiscal discipline and investment in growth sectors and this is critical to avoiding more borrowing.
“These policies would not only attract foreign capital but also support local businesses by creating a level playing field and reducing the risk of tax hikes or unnecessary regulation,” he noted.
IOL BUSINESS
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