By Samuel Seeff
Finance Minister, Tito Mboweni presented a ’positive budget’ under challenging circumstances. Perhaps, the most challenging over the last twenty seven years.
Seeff welcomes the focus on economic recovery, relief for households, vaccination and the various reforms proposed including in corporate tax, the public sector wage bill and state-owned enterprises.
We are delighted that instead of facing tax hikes, Treasury is providing tax relief in the form of a 5 percent adjustment in the personal income tax brackets which should bring relief for low to middle income earners especially.
A missed opportunity is perhaps that transfer duty, including the R1 million exemption threshold remains unchanged. Some relief here, especially at the higher end where transfer duty was increased three years ago could have gone a long way in driving higher sales in the property market, and in turn, higher transfer duty revenue and economic contribution.
While Capital Gains Tax and VAT remain unchanged, consumers and household budgets will need to absorb increases such as the 15.63 percent electricity hike from April 1, along with a 26c per litre increase in the fuel levy which will affect their cost of living, eat into household budgets, and will offset some of the personal tax savings provided.
Other positive aspects of the budget include the significant focus on job creation, with an overall allocation of nearly R100bn, that includes an infrastructure budget, as well as, short-term job creation initiatives across various departments.
The increases in the pensions and social grants are also welcome news for the economy.
The minister further noted that South Africa’s economy is expected to rebound by 3.3 percent following a 7.2 percent contraction in 2020. Global growth is expected at 5,5 percent spurred by vaccine roll-outs, China at 8.1 percent, India at 11.5 percent and SADC at 3.2 percent.
Given that the latest inflation rate of 3.2 percent as at January is still well within the Reserve Bank’s target range, Seeff says the outlook for the interest rate remains positive and property buyers can still take advantage of the five-decade low borrowing costs.
It remains one of the best times ever to buy property.
Seeff expects the market outlook to remain positive based on current conditions.
As we have seen over the last year, the bulk of the activity will be below R1,5 million and up to R3 million in the high end areas.
The bank lending climate remains favourable for qualifying home buyers, but sellers will need to continue pricing competitively.
Samuel Seeff, chairman of the Seeff Property Group
*The views expressed here are not necessarily those of IOL or of title sites
BUSINESS REPORT