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Blue Chip Journal Issue 76

  • Text
  • Investment
  • Planners
  • Funds
  • Investors
  • Probability
  • Pandemic
  • Global
  • Planners
  • Investing
  • Equity
  • Advisors
  • Asset
Blue Chip is a quarterly journal for the financial planning industry and is the official publication of the Financial Planning Institute of Southern Africa NPC (FPI), effective from the January 2020 edition. Blue Chip publishes contributions from FPI and other leading industry figures, covering all aspects of the financial planning industry.

On the money Making

On the money Making waves this quarter SARS Commissioner breathes sigh of relief The Minister of Finance delivered an Emergency Budget in June 2020, which can be described in diplomatic terms as gloomy and uneventful. Most notably, despite speculation by some to the contrary, the Minister did not impose any new taxes, which leaves SARS with no respite as it faces a mighty revenue shortfall of around R300-billion. The Minister has indicated that the funds will be sourced by other means, seemingly letting SARS off the hook to a degree. From here onwards, one foresees SARS embarking on two possible paths in the coming fiscal year, or a hybrid of the two. The obvious, but difficult, answer to this equation is to try to stem the tide by prioritising collections – most taxpayers and their tax advisors appear to expect SARS to be extremely aggressive in its collection of taxes in the coming months, given the government’s desperate need for more funds. SARS may take an alternative approach to the crisis. It may decide to not participate in Covid-19, instead of deploying its resources to extract taxes from a limping tax base, it may use the year of famine as an opportunity. The Commissioner has lamented the lack of capacity within SARS. If SARS uses this opportunity wisely, we may just see a more resilient and assertive revenue authority emerging from the debris of the pandemic. • By Jean du Toit, Admitted Attorney & Head of Tax Technical at Tax Consulting SA Balancing economy and health Infections in the country’s economic heartland of Gauteng appear to be on the rise. On the economic front, the Emergency Budget tabled in June by Minister Tito Mboweni makes the dire fiscal reality very clear. The economic devastation caused by the lockdown has reduced tax collections while increasing calls on the fiscus. Reducing the economic burden on citizens and their dependents is critical not least from a socio-political viewpoint: if people cannot discharge their obligations to dependants, civil disobedience may follow. REBUILDING THE SOCIAL COMPACT To combine economic revitalisation and health or safety, the government must successfully transfer responsibility from the state (lockdown and all its attendant laws) to civil society, both individuals and corporates. This is a difficult exercise to pull off at the best of times, but the government has squandered a lot of the trust it originally enjoyed. The public has grown cynical about the myriad regulations that have eroded trust. Perhaps most important of all, the extreme slowness with which the much-heralded aid to citizens and companies has been rolled out, and the growing suspicion that corruption is occurring, has reduced the propensity to follow the government playbook. The government has consistently indicated that Covid-19 is with us for the foreseeable future, yet its plans have seemed ad hoc and short term in focus. If civil society can be convinced that a long-term and carefully constructed plan exists, then we may yet win through. • By Professor Rashied Small, Executive: Centre of Future Excellence (CoFE), South African Institute of Professional Accountants (SAIPA) Construction industry hit hard The construction industry has been touted as one of the key sectors the government should prioritise to ramp up job opportunities to revive the South African economy. It’s an industry employing hundreds of thousands of workers that was hit hard by the Covid-19 pandemic. There have been suggestions that the impact could result in a year-on-year contraction of 18%, which represents 4% of GDP. Potentially, this could mean the loss of up to 140 000 formal jobs, according to construction market intelligence firm Industry Insight. In response to Covid-19, the construction sector has formed a Construction Sector Covid-19 Task Team composed of contractors, built professional services firms, property developers, regulators, professional associations and manufacturers. It has submitted a comprehensive shortto medium-term plan to the government for actionable reforms to help the sector recover and is working with the government to develop an industryspecific Covid-19 Construction Health & Safety Protocol. Cobus Bedeker (above), MD of Evergreen Property Investments, says: “The construction sector is already working together to ensure the sustainability of this industry over the coming months to play its part in our country’s economic recovery. “There are huge opportunities in this property class in South Africa,” says Bedeker. “Too many of our elderly population are living in inadequate homes when they could be living in an estate offering a sense of support along with a ream of services and amenities.” 10 www.bluechipdigital.co.za

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