Daan Steenkamp's Snippets

News:

Hard news:

Economics

You would, no doubt, have seen that our economy is now predicted to grow at some 5% this year. The interesting thing about this is that the economists, who so predict, say that we should be able to maintain that momentum – especially if the government is true to its word and creates a more enabling economic environment by removing the obstacles to growth. One of the reasons for our resurgent economy is that our middle- and upper-income groups, which account for some 80 to 85% of the spending power in this country, have not declined to the extent anticipated. Our composite leading business cycle indicator has just hit an all-time (61-year) high. 

Two of the restrictions on our economic growth is the over-concentration of power in the hands of the government, resulting in the overregulation of our economy and restrictive labour legislation. If this changes, and if our labour legislation is addressed, I would eat my underpants.

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You will recall that a week ago there was much talk about extending our social grant system: now termed BIG (basic income grant) changes. The changes mooted will create a three-pillar system comprising social grants, contributory social insurance, and voluntary insurance. For this to be affordable, without raising our total spend and thus taxes, money will have to be saved elsewhere in the state budget (remember the promise to cut spending?). It would be interesting to see how much we must contribute for the presumably compulsory social insurance… a tax by any other name?

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So, are we going to pay more tax and what will the result of this be? Two academics from the UP have published an article predicting a tax revolt in South Africa on the back of a high taxes: they say that South Africa is within the top ten countries with the highest tax-to-GDP ratios, and that a SA stats study indicated that 93% of respondents were extremely concerned about the possibility of the economic collapse of our state. Do look: http://www.dejure.up.ac.za/images/files/vol54-2021/Chapter%203_2021%20Molebalwa.pdf

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Nigerian banking giant Access Bank acquired Grobank last year and is the first outside-of-south-Africa African bank to acquire a banking licence here. Access Bank will provide a full-suite banking offering in South Africa. The fact is that innovative smaller banks have undercut, fee wise, the established banks in South Africa substantially. 

Business

When academics start talking tax revolt, one must ask how state service delivery is going to be implemented other than through internal change. Two recent reports deal with just this problem:

  • municipal taxes are reportedly set to rise by double digits; and
  • the SABC is casting around for alternative sources of revenue after a report that 76% of users of its services do not pay licence fees.

The further funding of both is going to be problematical. The private sector is reportedly loathe to collect revenues that the SABC cannot and, as far as municipal services are concerned, the term service is increasingly questioned as municipalities fail financially and simply do not provide the services that are paid for by some. In KZN, our capital city, Pietermaritzburg, is said to have a run out of funding and no longer fixes, by way of example, traffic lights. Yet, it is clear for all to see that there are settlements within the city perimeter which are simply not taxed or penalised for non-payment of services, as our city fathers simply do not have the political stomach for the ensuing revolt.

We have some 2078 municipalities in South Africa of which 163 are said to be in financial distress, and 40 of which are not delivering full basic services. Oh yes, and municipal employees want a raise!

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Working from home? Two interesting topics have once again surfaced on this front: the first is the tax implications of working from home rather than in the country in which your employer is situate employer is situate; a bit fanciful for most of us, but still: https://www.businesslive.co.za/bd/world/2021-06-15-the-problem-with-working-from-an-exotic-location/

The second has to do with income tax deductions for home office purposes; to take a look – but read the last bit on CGT: https://www.sars.gov.za/types-of-tax/personal-income-tax/tax-season/home-office-expenses/

Whilst on the topic, do look at the definition of a hybrid work model as opposed to working remotely:

https://blog.trello.com/the-hybrid-work-model-is-it-worth-the-hype?utm_source=newsletter&utm_medium=email&utm_campaign=trello-jun2021-newsletter2

When does overtime commence when working from home? https://businesstech.co.za/news/business/499073/the-laws-around-overtime-and-working-from-home-that-every-south-african-should-know/?

Finally, if you are faced with a compulsory CV19-vaccine-before-returning-to-work policy, look at this:

https://www.cliffedekkerhofmeyr.com/en/news/publications/2021/Employment/Employment-Alert-14-June-2021-An-end-to-the-debate-The-government-expressly-permits-mandatory-workplace-vaccination-policies-.html

Property

The mini post-covid residential sales boom is over. The FNB Property Barometer shows that year-on-year house price appreciation is slowing as is the rate of bond applications in respect thereof. Nevertheless, these rates are still above pre-pandemic levels.

On the commercial and industrial fronts, the market is strained and awaits robust economic growth.

Quotables

“Since the advent of the new law, there has been a great reluctance from many businesses to donate because of disclosure. So, as a result, we have struggled to get money in time as opposed to previous years,”

The ANC’s Paul Mashitile on the organisation’s struggle, to pay staff salaries on time, for some months, owing to cash-flow problems.

Comment

The above quote gave me perverse pleasure as, rightly or wrongly, the perception was that the ANC used its political clout to improperly fund itself (remember Chancellor House?). However, no, it is not currently broke, it is merely challenged. Crowdfunding, apparently, is being considered. Presumably, the cash rolls in and no one has to say who donated?

Given this unpleasantness, kudos to the Prez that he seems intent on rooting out malpractices, despite the cost to his party.

Lighten up

Instead of giving a politician the keys to the city, it might be better to change the locks. 

Larson

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A liberal is someone who feels a great debt to his fellow man, which debt he proposes to pay off with your money. 

Liddy

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Government is the great fiction, through which everybody endeavours to live at the expense of everybody else. 

Bastiat

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Contributed by:
Daan Steenkamp Attorneys
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