Immediate reaction to Finance Minister Nhlanhla Nene’s National Budget.
BE NOBODY’s darling. This is one of my favourite lines of poetry, penned by Alice Walker.
In his first budget speech, Finance Minister Nhlanhla Nene was not trying very hard to be anyone’s darling as he slammed a tax increase onto the middle and upper classes.
Do the tax reforms proposed in this year’s budget meet the principles that the minister set out in the medium-term budget policy statement in October last year?
The effect of personal income tax hikes across the board is not likely to be distortionary. It’s also not surprising as the economy is being managed into investment-led, and not consumption-led, growth. In this light, Nene’s programme has to be evaluated in terms of how it affects the viability of deeper structural reforms. And the action plans of departments with their hands on the microeconomic levers, such as trade and industry, economic development, labour and many others, have to attract as much, if not more scrutiny, as the national budget.