EARLY RESPONSE TO BUDGET
Kent Durr MP

“The Budget is neutral to mildly pro- growth. It is cautious but sound. Minister Trevor Manuel gives with the one and takes with the other.” said Kent Durr, ACDP Spokesperson on Finance.

“I believe the Minister could have safely reduced the company tax rate by another percentage point without doing any damage or he could have eliminated the secondary tax which puts our effective tax rates 7% above the global average for comparable economies. We need to get the comparative cost of doing business in South Africa down more aggressively if we wish to get the kind of sustainable growth that we can and should achieve.

We need to be more competitive in a globalizing world.

We like the concessions to the elderly savers and to the disabled and the poor. We also like the Medical Aid concessions which will be a major stimulation to public health.

The problem of the relative efficiency of the public sector remains and we share the Minister’s concerns in this regard.

We like the emphasis on job creation and wealth creation - NO DOUBT ‘WORK FARE’ IS BETTER THAN ‘WELFARE’.

The emphasis on upgrading skills through the education is correct and contribution to the criminal justice system is to be welcomed

The budget is to be welcomed but one can’t help but get the feeling that with multi-year budgeting the Minister gets several bites at the same Budgetary Cherry!

If I had to judge by the Minister’s speech I would give it a high rating – except for the “proud eyes” he keeps alluding to. I prefer humble eyes.

The fact is that the budgetary numbers and speech don’t always add up.

It has the great merit of being fiscally sound but does not fully exploit President Mbeki’s “confluence of events”. 4.2% by 2007 simply is not enough. I have the feeling we are undershooting again and the economy is more robust in real terms than what our statistical measurements now record.

This economic snowball is gathering momentum and will grow.

In short when taken as a whole this is an impressive program of which South Africans can be justifiably proud of because it reflects our collective effort.

However, not all state departments’ and Ministers display the skill of this Minister and the efficiency of large segments of governments at all levels remains low with an incapacity to deliver.

My greatest criticism remains that our national savings are too low to sustain exceptional growth and the Minster has not done enough to create the savings capacity by making deeper corporate tax cuts.”