Agri SA asks for support and drought assistance in MTBPS- South Africa

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Agri SA is looking forward to the Minister of Finance, Tito Mboweni’s maiden Medium-Term Budget Policy Statement (MTBPS) in Parliament tomorrow.

“We hope Minister Mboweni will make more funds available to boost agriculture’s competitiveness, and to support farmers especially in the drought affected areas,” said Dr Requier Wait, Agri SA Head of Economics and Trade. “Farmers need all the support government can muster, especially in these times of policy uncertainty.”

Agri SA would like to see the following in the MTBPS:

• Drought support: Agri SA was able to leverage R18 million in value for drought support from various private donations, and given the impact of drought on economic activity and job creation, it stands to reason that government should also get involved and contribute directly.
• Moderating taxes: Personal income taxes are reaching a point where higher tax rates will start showing decreasing returns in tax revenue. Increasing VAT would be unpalatable in a slowing economy where consumers’ budgets are stretched thin. In the context of South Africa’s investment drive, higher company tax rates could deter much needed foreign direct investment (FDI).
• Relook excise taxes: Rapidly escalating excise taxes on tobacco and alcohol have already created a shadow economy for illicit goods, that impact on producers directly. A relook at excise tax increases, as well as guaranteeing consistent enforcement of excise duties is especially necessary for local cigarette producers.
• Government expenditure and guarantees: Balancing expenditure against weakening revenues will require significant cost savings. However, the rising public sector wage bill along with support to struggling state owned enterprises (SOEs) make this a difficult task. It is necessary to finally implement tougher governance standards on SOEs, as have been repeatedly promised before.
• Rising government debt: The interest payments for government debt is one of the fastest growing expenditure items in the budget. As the government budget deficit persists, the pressure from rising government debt necessary to cover the shortfall increases.

Agri SA needs to emphasise that the Minister cannot impose more burdens on farmers, but rather to commit to providing support for the sector so that it can fully recover and continue ensuring job creation. This will ensure a positive contribution to the gross domestic product (GDP) and that South Africans are food secure.

Dr. Requier Wait
Agri SA Head: Economics & Trade
T: 012 643 3400
C: 073 304 0932