Property leaders positive on Budget

Finance Minister Pravin Gordhan. Image by Business Day

Finance Minister Pravin Gordhan.
Image by Business Day

Finance Minister Pravin Gordhan’s Budget speech received a positive reaction from the heads of various real estate companies.

Dr Andrew Golding, CE of the Pam Golding Property group welcomed the minister’s efforts to prioritise economic growth, job creation and infrastructure expenditure. Golding also praised the provision of R9.3-million in tax relief for cash-strapped consumers.

“From a property market perspective, it is disappointing to note that there was no property specific tax relief or schemes introduced which would help home ownership generally, but in particular first time home ownership. However, new spatial plans for cities, upgrading informal settlements, increased social infrastructure and improved public transport, coupled with the announcement of 216 000 houses to be built, is positive news,” says Dr Golding.

“Of concern however, particularly on the back of recent fuel price hikes, is the increase in the general fuel levy by 12 cents a litre and the road accident fund levy by 8 cents a litre, as this places further pressure on consumers and inflation.”

“All in all, the Budget appeared to meet the challenging need for a balance between curbing unnecessary expenditure and investing in our country and its people. Considering the ongoing global economic uncertainties faced, South Africa’s economic policy has consistently achieved a stable economy and the Minister of Finance is commended on this,” concludes Dr Golding.

Shaun Rademeyer, CEO of BetterBond, was pleased with the announcement of measures to help small businesses in South Africa but also lamented the lack of tax relief for homeowners.

“We were also pleased that further measures were announced to encourage small business development, as this indicates growing government recognition of this sector’s ability to generate employment and assist more South Africans to rent or buy decent housing,” Rademeyer said.

Berry Everitt, MD of the Chas Everitt International, said that the Budget met expectations for an election year.

“The focus on education, health, housing and infrastructure, grants and pensions was thus almost inevitable, and it is also no surprise that the widely rumoured tax increase for the wealthy did not materialise.”

Lew Geffen, chairman of Sotheby’s International Realty in SA, also welcomed the decision not to raise the tax rate on the wealthy.

Geffen says this type of wealth tax, similar to that recently imposed in the UK and some European countries, is of course an easy answer for governments that urgently need to raise revenues to please poor voters who are clamouring for service delivery.

“However, the Minister has realised that it is also a trap, because it generally offers only a very short-term advantage, followed by a long and often permanent drop in revenues. High earners are quick these days to react to any punitive tax measures by simply moving their wealth elsewhere and, once bitten, are reluctant to move it back again, especially if, as in SA, they perceive their contribution are being wasted through widespread corruption.”

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