Budget 2020: The good, the bad, and the ugly

It was anticipated that today's budget 2020 would be ugly, but what we saw was a very high risk balancing act - no tax increases and big public expenditure cuts.

Some unions described the budget and the cuts asked from civil servants as a "declaration of war".

Cosatu called the budget ''feeble and inflammatory''.

This is because civil servants have been asked to take less salary.

Bruce Whitfield asked if it's not a big bet that government would convince civil servants to take one for Team South Africa - and The Money Show interviewed three economists for their assessment.

A good budget. Every budget has risks, but a lot of it is known. I think that some factors need more discussion like the nature of negotiations with labour unions. I think that some of the discussions that have taken place suggest that it is not so much cutting pay than managing the overall envelope of that expenditure. There are many opportunities that one can have a look at, including looking at more senior civil servants taking more of the pain than junior civil servants. There are certain areas where we have to hire more civil servants like teachers, doctors, nurses - other areas we can look at for cuts. If I just think of at SARS - we have to reconfigure our own cost base before we can ask for more money.

Edward Kiesewetter, commissioner, SARS

There are three drivers of revenue - one is the economy and tax as a function of the economy. We have seen a significant decline in the level of tax compliance. My job is to look at tax compliance and we will step up our efforts to bring to book tax crime. We are seeing evidence of deliberate misrepresentation of goods that are imported so importers can underpay customs duty, we have seen over 600 companies that are shelf companies that enter the system with no intention to trade. I can give you a list as long as my arm of areas of gross abuse by tax payers. Also honest tax payers believe they can cut corners here and there. As we build the capacity of SARS, our ability to detect non-compliance will increase.

Edward Kiesewetter, commissioner, SARS

I think it was a fine balance. I think this budget emphasises stabilising the macro-economic environment, knowing quite well that of course inflation was quite weak, which on the spending side it can be perceived as encouraging more spending. It is also indicative of weak demand in the economy. I think trade unions and workers will view it as an austerity budget. Unions are not happy and one would not expect them to be. This budget was a trade-off: do we prioritise and stabilise the macro economic fundamentals which are quite important with respect to prospects of growth or just continue in the same fashion with the wage bill and public sector.

Ndumiso Hadebe, independent economist

I think in the short term, there's also the consideration around March 27th with the looming Moody's ratings outcome and the impact that could have for South Africa's fiscal and monetary position.
I would think that perhaps it could potentially buy us some time with Moody's. Unfortunately our debt costs continue to rise: 230 billion rand a year in interest. Of course the labour unions might not be happy with it but I think there are tough decisions and trade-offs that were needed to be made and this budget spoke to that.

Ndumiso Hadebe, independent economist

I was pleasantly surprised that there were no tax increases - but essentially tax decreases. I'm also pleasantly surprised at the expenditure cuts. So I see this as a very market-friendly budget. In a low growth environment, raising tax: there's always the concern that you'll do more harm than good. So this will certainly go some way to instilling some business confidence. It is what was needed.

Kyle Mandy, tax policy leader - PwC South Africa

Listen to the entire discussion below.

Get the 10 most-read articles of the week from Bruce Whitfield’s The Money Show, emailed to you every Friday morning.

Subscribe to our Business Wrap Newsletter


Recommended

by NEWSROOM AI
Read More
It is necessary for Minister Tito Mboweni to revise growth forecast - expert

It is necessary for Minister Tito Mboweni to revise growth forecast - expert

Pundits share their thoughts on what to expect from the budget speech by Finance Minister Tito Mboweni.

'This was not blackface, it was bad makeup,' insists Dis-Chem store manager

'This was not blackface, it was bad makeup,' insists Dis-Chem store manager

Killarney Mall branch manager Tarryl Moonsamy says the staff member brought her own mannequin and did the display.

Nando's reply to a mouldy burger - the best and the worst ads of the week

Nando's reply to a mouldy burger - the best and the worst ads of the week

A witty reply to a mouldy Whopper is a winner.

[WATCH] Mother playing on swing with child from fourth-floor window goes viral

[WATCH] Mother playing on swing with child from fourth-floor window goes viral

Khabazela shares some of the videos that went viral on Twitter and Facebook.

If you make a mistake when transferring money (EFT) you don’t get it back easily

If you make a mistake when transferring money (EFT) you don’t get it back easily

Made a mistake when paying by EFT? You're going to battle to get your money back, warns consumer journalist Wendy Knowler.

Popular articles
Get up to 100% off your April rent, perhaps May too - Property Industry Group

Get up to 100% off your April rent, perhaps May too - Property Industry Group

“There can be up to 100% off the rental in April and potentially even in May,” says Estienne de Klerk (Property Industry Group).

'Every country successfully dealing with Covid-19 have extended their lockdowns'

'Every country successfully dealing with Covid-19 have extended their lockdowns'

The Money Show’s Bruce Whitfield interviews futurist Graeme Codrington and public health specialist Prof Susan Goldstein.

Herbalists urge government to let them play role during COVID-19

Herbalists urge government to let them play role during COVID-19

City Press reports that traditional healers and herbalists say they have been 'left behind' in the response to the outbreak.

[LISTEN] Fake news around COVID-19 and how to spot it

[LISTEN] Fake news around COVID-19 and how to spot it

Veteran journalist Raymond Joseph advises on how to discern whether information is reliable and factual.

COVID-19 cases reach 1,749 and SA has has 13 deaths confirmed

COVID-19 cases reach 1,749 and SA has has 13 deaths confirmed

Health Minister Dr Zweli Mkhize also thanked the Motsepe Foundation on behalf of government and unions for donating equipment.

[LISTEN] Centre for the Less Good Idea keeps the arts alive during lockdown

[LISTEN] Centre for the Less Good Idea keeps the arts alive during lockdown

The centre is an interdisciplinary incubator space for the arts based in Maboneng, Johannesburg.

[WATCH] LeadSA applauds frontline heroes running with the baton

[WATCH] LeadSA applauds frontline heroes running with the baton

LeadSA applauds everyday heroes standing in the frontlines making a difference in communities.

Ramaphosa summons Ndabeni-Abrahams for breaking lockdown rules

Ramaphosa summons Ndabeni-Abrahams for breaking lockdown rules

A picture emerged on social media of the minister having lunch with former Member of Parliament Mduduzi Manana despite the national lockdown.

Informal traders confused about lockdown regulations

Informal traders confused about lockdown regulations

City of Cape Town says the process of issuing permits to informal food traders only applies to those selling uncooked foods.

[LOCKDOWN] Alcohol and cigarette ban costing SA billions - Justice Project SA

[LOCKDOWN] Alcohol and cigarette ban costing SA billions - Justice Project SA

Chairperson Howard Dembovsky says for both we are losing about R135-million per day in levies and revenues.