Forget SONA, the Budget Speech is where the Money is!

ByAmanda Mathule

I thought I’d get ahead of the queue, leapfrog over SONA, and get my ten cents worth in with our new Minister of Finance. Budget Speech 2022 is where the money will be spent.

In my blog last week I encouraged corporate South Africa to relocate their head offices from Sandton to Soweto, highlighting the obvious economic benefits to the community that would flow from such a choice.

But as they say, nothing for mahala.

Show me the money

Why not incentivise the process and leverage the brute force of corporate greed. If the NPV exceeds the threshold, they’ll build it. Government offers financial incentives to business all the time. Take the Department of Trade, Industry and Competition as a fine example. Their Special Economic Zone (SEZ) strategy offers a package of tax incentives including the employment tax incentive, building allowance, and reduced corporate tax rate to companies that meet the qualifying criteria.

Drawing upon the analysis of a prominent local think tank, government would appear to have spent the best part of R25bn on SEZs and another three letter acronym, IDZs (Industrial Development Zone). Only three of the 11 proclaimed zones would appear to have attracted meaningful commercial activity, all are loss-making in the sense that rental income does not cover operational costs, and all require government subsidies to survive.

What better time to rethink how you’re going to spend taxpayer’s money now that you’ve settled in your new office and 23 February is looming on the horizon. 

Let’s give Soweto a chance! 

We could even use the same three letter acronym SEZ (Soweto Economic Zone) to save some money. Government won’t have to spend a dime. No subsidies for infrastructure required. It’s already built and they have come. And the city is already smart.

For your suggestion box

A suggestion for your Budget Speech:

  • Proclaim the Soweto Economic Zone.
  • Extend the building allowance for offices built in the SEZ to include a 100% upfront write off.
  • Employees living and working in the SEZ qualify for a 50% reduction in PAYE.

You can fill the hole in the “lost tax” by dipping into the $750m World Bank loan before you set the budget for blue lights and cars. At least the building will be built and people will be working in it.

More importantly, borrowing from Professor Bonang Mohale, what price “ … for businesses to take the reins and realise its role in promoting job creation so that the self-respect and self-worth of so many struggling South Africans can be restored.”

Help our captains of industry pluck up a little courage. Show you approve of their initiative. Building a head office in Soweto is one way of taking the reins.

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