#Budget2017: The impact on consumers
Cape Town - The Consumer Goods Council of South Africa (CGCSA) has congratulated Minister of Finance Pravin Gordhan for presenting "a pro-poor budget whose core thrust is to achieve inclusive growth and broader economic transformation".
The CGCSA agrees with Gordhan that South Africa is at a cross-roads and is faced with the typical challenges facing other emerging economies, such as low GDP growth, high unemployment and social dislocation as a result of poverty.
The CGCSA believes that to achieve inclusive growth, there should be further regulatory and economic certainty and closer co-operation and partnership among the private sector, the government and labour as well as other social partners.
South Africa is not short of ideas, neither has the country run out of solutions. What is needed is greater commitment to take tough decisions necessary to further improve investor confidence, said the body.
"The CGCSA would also like to caution government on the need to ensure fiscal sustainability by ensuring revenue leakages are tightened and operational efficiency improved in State Owned Enterprises (SOEs). This will help the government to reduce borrowings needed to bail out loss-making SOEs, diverting much needed resources to invest in uplifting the majority poor," the organisation said.
"As it is, the government debt of R2.2trn is too high. We are, however, gratified to note that the budget deficit for 2017/18 of 3.1% of GDP is in line with the government’s fiscal consolidation commitment."
Neil Roets CEO of Debt Rescue said, generally, Budget 2017 was positive for financially strained consumers.
"Changes to the income tax rate is great news for consumers in the middle income bracket, not being affected. The slight increase of just over 1% in the tax free threshold will be welcomed by those affected," said Roets.
"The total of 39c per litre on the fuel and road accident fund levy will hit consumers hard, both directly and indirect, especially if there are further fuel price hikes in the future."
He said there was good news for consumers in the increase of the threshold of transfer duties on property from R750 000 to R900 000, which encourages property ownership and an increase in assets.
Compuscan’s senior data analyst, Jacobus Eksteen said that concerns exist around debt levels among citizens.
"The fact that only 46% of credit-active individuals have no missed payments points to the financial pressure on the majority of consumers. Our data has revealed that consumers’ debt-to-income ratio is very high across all income groups. The hope is therefore that the focus in the budget will be on curbing wasted expenses or even raising VAT rather than increasing income taxes, although this will probably not be the case," said Eksteen.Read Fin24's top stories trending on Twitter: Fin24’s top stories