Budget kind to middle-income earners and SMEs

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"This was a Budget that calmed many nerves," said Anthea Scholtz, tax director at Deloitte. "In his Budget speech Finance Minister Nhlanhla Nene's pronouncements gave us assurance that he would take a balanced approach. Of course, we do need to raise significant additional revenue, but it is clear that we are not going to suddenly see a whole lot of new taxes introduced in response to that need."

While the Budget was kind to middle-income earners and small to medium businesses, Scholtz warned larger corporates that there is a need to tread carefully in the year ahead.

"We may not have seen many new tax laws being proposed, but this allows for a period of consolidation and for SARS to focus on the enforcement of existing tax laws," she said. "Companies that are guilty of base erosion and profit shifting (BEPS) will clearly be in the spotlight. The Minister has also intimated that the withholding tax on service fees will indeed be introduced, effective 1 January 2016, in spite of objections."

Credibility of government

JP Landman, political-economic trend analyst, further reassured delegates that Minister Nene's Budget should be seen as positive. "The single most important thing that the Minister needed to do was to protect the solvency and the credibility of the government," he said.

"I believe that he did that in this Budget. We need to keep the rating agencies at bay by effectively managing our debt, and the Minister has given the assurance that we are doing that. We cannot afford the rating agencies to downgrade our economy."

Landman was 'intrigued' by the Minister's forecast of 2% economic growth, saying that it was the first time he had ever seen a government being more pessimistic about growth prospects than the private sector. "But we must remember that what we are still seeing is growth," he said.

"Even though there was a one percentage point increase in the personal tax rates, we all know that it could have been worse. Hence, while there are some areas where we will feel the pinch, on the whole, I see this as a balanced Budget for the country," Scholtz concluded.