South African President Cyril Ramaphosa, left, shakes hand with newly elected Finance Minister, Tito Mboweni, in Cape Town. South Africans are looking to Minister Mboweni this week to bolster their personal finances, job prospects, and the economy as a whole writes PwC. (AP Photo)
CAPE TOWN - South Africans are looking to Minister Mboweni this week to bolster their personal finances, job prospects, and the economy as a whole. 

To achieve this, the finance minister would need to make announcements on five key topics, according to PriceWaterhouseCoopers.

The Medium-Term Budget Policy Statement (MTBPS) will be broadcasted on October 24th.

PwC WISH LIST

PriceWaterhouseCoopers's economist Christie Viljoen said, on Tuesday, that firstly, news on the value-added tax (VAT) zero rating of more consumer goods was imperative.

An independent panel has delivered a report recommending the zero-rating of white bread, school uniforms, sanitary products and nappies. In turn, the Parliament’s Standing Committee heard several submission of adding certain chicken products to the list. 

Viljoen  said that despite these recommendations the Ministry of Finance has yet to make a formal indication on when (and what) changes will be implemented. 

The National Treasury will need to weigh the benefit to the poor against the expected loss in VAT revenue,  Viljoen  said.

Secondly, the MTBPS needs to address the issue of record-high fuel prices. 

PwC argued that the Department of Energy has indicated that it cannot make adjustments to taxes currently forming part of wholesale and retail fuel prices, as these were adopted by Members of Parliament when they signed off on the 2018/19 fiscal budget. 

A task team made up of officials from the National Treasury and Department of Energy have for several months been working on a strategy to reduce the impact of sharply rising fuel prices on South African households and businesses. 

With another fuel price increase expected in November, their work needs to bear fruits,  Viljoen  said. 

Thirdly, while Minister Mboweni is facing pressure on tax revenues, he also needs to recalibrate planned national expenditure. 

President Cyril Ramaphosa promised, as part of his economic stimulus and recovery programme, the “reprioritisation of public spending to support job creation”. 

The president envisioned spending on activities “that have the greatest impact on economic growth, domestic demand and job creation”. At the same time, he pledged that this reprioritisation “will take place within the current fiscal framework and in line with the normal budgetary process”. 

The balancing act between fiscal restraint and maximum job and growth impact is a substantial challenge, the company argued.

PwC then brought in the issue of unemployment.

A statement released after the recent Jobs Summit committed the government to financial and other obligations in the quest to increase employment creation.

These include the existing employment tax incentive encouraging youth employment being extended for a further 10 years. 

Other pledges for which fiscal funds would need to be allocated, according to PwC, include a facility for the industrial sector to access finance at preferential rates, a guarantee facility to extend the term of financing provided to industrial projects, a R1.5 billion smallholder farmer support fund, and a R1.5 billion township enterprise support fund. 

The company then delved into infrastructure.

The MTBPS will need to lay the groundwork for President Ramaphosa’s new infrastructure fund,  Viljoen  said.

In a speech on September 21st, the President announced the establishment of this fund aimed at “unlocking the potential to create more jobs on a large scale”. 

He noted that the fund “will fundamentally transform our approach to the rollout, building, and implementation of infrastructure projects”. 

Viljoen  said that the fiscus will contribute R400 billion to the Infrastructure Fund over the medium term. 

The hope is that this investment will attract additional resources from developmental finance institutions, multilateral development banks, and private lenders and investors, according to the company.

Supplied by PwC.


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