Business leaders have offered an 8-point plan on how South Africa can avoid a rating cut to junk and further economic turmoil – and it involves taking on a lot of taxes.
Following meetings with finance minister Pravin Gordhan, over 100 business leaders recently met with President Jacob Zuma to discuss ways in which companies and government can come together to help fix up the economy.
According to a report by BDLive, as part of a solution, SA business came to the party with an 8-point plan, detailing goals and concessions the private sector was willing to come on board with.
Treasury said it will evaluate the suggestions, which involve pain for business through taxes and for government through cost-cutting.
The plan includes an acceptance of tax increases in the 2016/17 budget expected later this month.
While businesses accept an increase in the marginal tax rates for wealthy individuals, the plea was made to make further tax hikes broad-based – such as a hike in VAT or the fuel levy.
According to BDLive, the other seven points are:
- Uniting behind a cohesive narrative and plan;
- Over-delivery on fiscal consolidation;
- More effective management of state-owned enterprises, by appointing, for example, professionals to their boards;
- Accelerated public private-partnerships;
- A review of legislative implementation to ensure consistency and certainty;
- Ensuring that labour legislation contributes to inclusive growth, especially of the youth;
- and the appointment of a standing anti-corruption committee to combat graft in both the public and private sectors.
Business has reportedly said it will support government in the “tough decisions”.
Meanwhile, in addressing the business leaders, Zuma said that South Africa has a lot of positive attributes, but that the short-term economic outlook was not inspiring.
“We must abandon the ‘business as usual’ thinking,” he said.
“As the saying goes, every cloud has a silver lining. This crisis has created wonderful opportunity for us to work more closely together.”
The South African economy has not fully recovered from a decision by Zuma in December to fire then finance minister Nhlanhla Nene.
That resulted in the rand tanking against all major currencies, with the appointment of relatively unknown David van Rooyen causing uncertainty, prompting investors to pull out of the country.
Zuma moved quickly to re-appoint Pravin Gordhan to the position, leading to a mild recovery, however the country’s sovereign bonds remain a single jittery mistake away from junk status as the prospect of economic growth remains muted.