In the light of the Budget Speech there have been some very negative comments and feelings for investors in particular.
Look on the bright side –
We’re all feeling a bit concerned about the new Dividend Withholding Tax - but STC could also have been increased to 15% - don’t blame DWT! At least retirement funds are exempt from DWT! So it’s good news for investors.
Even thought the budget is targeting the high income earners / investment driven South Africans (increased Capital Gains tax, brokerage fees on financial transactions), one has to keep in mind the positive aspects for investors: Cross-border investment procedures are to be modernized for both investments in and out of South Africa in order to lower costs and overcome unnecessary barriers ; a proposal has been made that legislation be introduced with regards to local managers of foreign funds not to be involuntarily subject to worldwide taxation ; we still have an interest and foreign dividend exemption and measures will be put in place to assist all taxpayers in the saving process, which is a vital aspect that many South Africans have not been focusing on.
Also, our tax money is used as a portion of the budget for investment in infrastructure. Therefore your tax is not only expensed but actually capitalized into bricks and cement to create infrastructure that is fundamental to South Africa. A country greatly benefits from having good roads, airports, harbours and railways. Think big picture, think exports, think tourism, think opportunities! I’ve been to countries that have a very poor infrastructure and it’s very difficult and unpleasant to travel in a country that doesn’t focus on these basics.
Enjoy the well deserved weekend after a very interesting week in the markets, keep your eye on the blog – I’m off to the beach (us Capetonians only work on Friday mornings)!
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