SA business gives Mboweni's zero-based budgeting thumbs up, but calls for no tax increases

Finance minister Tito Mboweni has said SA should opt for zero-based budgeting.
Finance minister Tito Mboweni has said SA should opt for zero-based budgeting.
Gallo Images, Brenton Geach
  • B4SA, which represents a majority of business organisations in South Africa, says zero-based budgeting will be a key part of SA's economic recovery. 
  • It says the zero-based budget should be coupled with limiting expenditure growth to below inflation, reducing the public wage bill, and cutting the funding requirements of SOEs. 
  • It also wants no increases in tax rates. 

Zero-based budgeting will be instrumental in curbing public debt, according to Business For South Africa.

The organisation, which represents a vast majority of business organisations in the country, on Friday released a 12-point economic recovery plan, estimated to require R3.4 trillion over the next three years.

During a briefing on the plan, B4SA's Martin Kingston highlighted some projections for economic growth, which are in line with Treasury and the Reserve Bank's estimates. B4SA sees growth contracting by about 10% this year, followed by a recovery of at most 5% in 2021 and 6% in 2022.

This is based on the assumption that SA follows a path of zero-based budgeting, an idea touted by Finance Minister Tito Mboweni in an effort to curb expenditure to avoid a sovereign debt crisis. With a zero-based budget, every expenditure item would have to be justified in terms of whether they are necessary, and only growth-enhancing expenditure would be prioritised.

The zero-based budget should be coupled with limiting expenditure growth to below inflation, efforts to reduce the public sector wage bill and reduced funding requirements of local government and state-owned enterprises.

This also calls for no increases in tax rates, however increasing tax collection is possible with higher growth and  through improved administration, according to B4SA.

Tax incentives

President of Business Unity South Africa (BUSA), Sipho Pityana, who was also attending the briefing, noted that the apex business organisation had made a pact with the SA Revenue Service (SARS) to play its part in encouraging businesses to comply and pay their taxes.

He said that tax incentives will also be instrumental to encourage investment by business into the economy.

BUSA CEO Cas Coovadia similarly shared views that tax policy and tax incentives could play a role in attracting both foreign and domestic investment and enabling business growth.

"Tax incentive and tax policy can only work on the back of a broad regulatory environment that actually enables attraction of investment … The policy environment needs to be consistent," he said.

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