Set against the background of an uncertain global economic outlook, Naamsa has issued its response to the recent announcement of the 2013/2014 Bugdet.
Commenting on the budget proposals set forth by Minister of Finance, Pravin Gordhan, the President of the National Association of Automobile Manufacturers of South Africa (NAAMSA) – Dr Johan Van Zyl stated that the minister had proposed a balanced and innovative set of proposals covering many facets of the National Development Plan in the face of subdued economic growth, uncertainty on the global markets and limited fiscal resources.
Dr. Van Zyl welcomed the minister’s call for greater fiscal discipline and commented that its potential for prioritising government expenditure would prove a drawcard for foreign investment, while the cut-back on government spending plans would play a vital role in reducing the budget deficit as a percentage of GDP to 3,1 per cent for the 2015/2016 fiscal period.
The latest budget didn’t reveal any major tax shocks and introduced a welcome personal income tax relief extending to R7,3 billion – an aspect that could have a positive effect on consumer sentiment and demand.
Another welcome aspect of the latest budget proposals was the announcement of continued investment in existing and new transport infrastructure as a key aspect in South Africa’s projected economic growth. The announcement of reforms to improve education and provide viable means for the support of youth employment was also commended as a catalyst for intra-African trade through the expanded economic growth it could bring about.
Perhaps the most welcome announcement in light of the current state of the local automotive industry was the proposed government undertaking to invest in biofuels and higher grade (more environmentally friendly) fossil fuels. Improvement in the availability of higher-grade fuels would, in turn, provide a means for importers and distributers to offer a broader range of models featuring improved efficiency and emissions technology.
There was a degree of uncertainty regarding the minister’s stance on CO2 emissions taxation to the tune of R355 million for the 2013/2014 period – a motion that could negatively impact on new vehicle prices.
Overall, despite the unwelcome increase in CO2 new vehicle emissions taxes, Naamsa views the budget proposals as positive catalysts for the support of future economic growth while improving business and consumer confidence in South Africa.
