Busa welcomes corporate tax cuts

Business Unity South Africa (Busa) has welcomed Finance Minister Tito Mboweni Budget Speech. The Minister announced that there would be no tax increases this year, a reduction in corporate tax, and increases in sin tax among others.

The government will also withdraw previously announced taxes of up to R40 billion which were announced in the previous budget due to an expected improvement in tax revenue collections.

However, this year’s revenue shortfall of R213 billion is the largest on record.

Busa’s Chief Executive Officer Cas Coovadia says the Budget was balanced and reduced pressure specifically on corporates through tax relief.

“It was a good Budget overall and Treasury usually understands the crisis we are in and tries to put us on a sustainable growth path. We welcome the corporate tax decrease. We think that will encourage some growth and some investment both local and global. The aggressive path towards getting us into a surplus situation by 24/25 needs to be welcomed.”

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Mboweni also announced that government employees will only receive marginal salary increases over the next three years. The Budget recommends growth in the wage bill by an average of 1.2 %.

The share of public-service wages sits at about 47% of government revenue in the 2020/21 financial year. The government has warned that a departure from this in the forthcoming wage agreement would not be affordable and would compromise debt stabilisation.

Mboweni says public service wage negotiations are already under way.

“The Minister of the Department of Public Service and Administration Senzo Mchunu is working with our partners in organised labour to achieve a fair public sector conversation dispensation when negotiations resume following new multi-year settlements later this year. I know there are some when they are not aware that conversations are taking place. They say that we are not telling the truth when we say that conversations are taking place. When you are not aware it doesn’t mean it’s not happening.