Monday, 7 March 2016

The 2016 Budget Speech lacked transparency




Last week’s budget speech has been bugging us, there was a consistent vagueness to it all. There is a lack of certainty, a lack of tangible, measurable deliverables; in a word - a lack transparency.

We have built our entire business on the importance of transparency. Not just sharing the facts with everybody, but ensuring they are able to understand how to work with and use the information provided to them.

While this is not the worst budget we could have had by some way, it remains to be seen if the small shifts and changes have the desired effect on the country’s revenue. It does however bother us that they have essentially sandbagged the voting public by using stealth taxes that aren't easily understood.

It feels very political that none of the easily understood taxes were increased - personal tax, VAT, business tax. And yet the things that were increased or added, all contribute to raising the cost of living for every single person in South Africa. 

We have often said that organisations thrive when non-financial managers can easily find, read and understand financial information that is relevant to them; particularly their budget and spending information. When people understand how their financial decisions affect the rest of the business they are empowered to manage them properly, and only then can they really be held accountable for those decisions. 

How is this any different? If Gordhan had raised VAT, people would have understood that and could have planned for it. Raising the fuel levy means that slowly but surely, the price of anything and everything transported by road (as most of South African goods are) will increase. So, an increase in fuel prices by 30c per litre and then adding a levy on tyres is going to have a significant impact on our entire economy; not just on people with cars or personal transport costs.

Levies are just an indirect tax that result in the steady increase in the cost of living across the board.
 If people don’t understand that, they can’t make informed financial decisions or see the repercussions of those decisions on their lives as a whole. Somebody without a car may indeed believe that this new budget makes no difference to their lives and won’t affect them.

As is too often the case with financial information, complete transparency can come at a price, and perhaps this was the case here and considered too threatening to those in power. With all the issues that have come up since the last municipal elections, it was perhaps felt that it was better not to present too “radical” a change so close to the next elections. In real terms, the impact is that the financial “burden” of the changes will not fall on the public all at once; but rather a slow but steady increase that will only be noticed in hindsight long after the elections have been and gone.

Our government has too often preached the importance of transparency, for the lack of transparency in this budget to simply be glossed over.  

Ends--