Even after the final reforms are in place investors will remain free to be their own worst enemy. Almost 10 years after National Treasury embarked on its mission to strengthen South African retirement savings, as reflected in the Taxation Laws Amendment Bill of 2020, the final reforms are scheduled to come into effect on March 1 but, unfortunately, fund members will still be free to sabotage their own retirement.
A small group of naïve billionaires in the United States are lining up begging for higher taxes on the super rich. I say naïve because they itemise a whole list of problems they imagine can be solved with this additional tax. The whole thing reminds me of the history of foreign aid in Africa.
The global economy has been left winded and weak by the effects of the COVID-19 pandemic and governments the world over have a difficult task ahead. With the Minister of Finance delivering his much-anticipated 2021 National Budget this Wednesday (24 February 2021), one can’t help but reflect on what solutions need to be implemented to rebuild what was lost in 2020 because of the pandemic and years of low economic growth before then. Whatever the solutions, they need to be monumental and perhaps even radical in order to revive our economy.
In the 2021 Budget, there are proposals to halt abuse of employment tax incentives and expand the scope of what constitutes a long-service award. The 2021 Budget Review contained several proposals in relation to individuals, employment tax and associated benefits and incentives.
When the minister of finance delivered Budget 2020/21 on 26 February 2020, COVID-19 was mostly contained to China (with other countries registering few cases). The budget therefore made virtually no provision for what was to become one of the largest health and economic meltdowns in the past 90 years. As such, except for the growing fiscal deficit, the main and consolidated budgets contained no earth-shattering announcements.
Finance Minister Tito Mboweni’s budget has been received very positively, as demonstrated by the reaction from markets. SA Inc companies have rallied, the rand initially strengthened, and even the bond market is acting positively. However, while there are notes of hope, this budget also demonstrates a number of key risks, overly optimistic assumptions and potential weaknesses, pointing to an extremely challenging path ahead for the country.
When it comes to employee tax, a little training goes a long way towards restoring productivity. Many employees don’t understand the complex tax calculations payroll applies to their earnings each month and often question these deductions.