Tributum Newsletter #24

Hello

SONA 2021 was boring as I predicted on Linked in, but at least the Budget turned out less scary than many of us thought. For now.

The good – Apart from sin taxes and the fuel levy the tax rates have remained largely unchanged. SARS’ capacity will continue being improved which should be good news for compliant taxpayers.

The bad – Achievability largely rides on whether equitable public wage negotiations will be possible without disrupting services. SOE’s remain ineffective and continue to require financial support. If these types of costs cannot be managed better the shadow of future increased taxes and/or debt will cast a dim light.

The ugly – the current and projected Government Debt to Government income ratio is set to stabilise at 88.9% around 2025.  To put that into perspective the budgeted revenue for 2021/2022 is R1.365 trillion (1,365 000 000 000 just to illustrate the size of the number) while current debt is around 4 trillion i.e., Government debt exceeds budgeted Government income by 2.93 times. I bet a bank will not lend you any money if that was your income to debt ratio.

Some tough choices will have to be made, and once these tough choices have been made, they would have to be actioned.  Unfortunately, our Government does not have a great track record when it comes to implementation. Let us hope they prove me wrong this time around. The Eastern Cape Government failed to prove me wrong when it decided to implement name changes to some of the province’s major centres when there are surely larger problems that require more immediate attention and resources.

That brings me to a saying by Jerzy Gregorek in Timothy Ferriss’ book Tribe of Mentors – “Hard choices, easy life. Easy choices, hard life”. The hard choices Government must make now should ease the burden in the long run. Sticking to easy choices and actions now will only lead to hardship in the long run. The same goes for us – the easy choice of sleeping in versus the tough choice of getting up and going for that cycle, the easy choice of not returning that phone leading to the much tougher conversation when you eventually do, and the list goes on. I placed a post-it with that saying on the mirror in the bathroom my daughters normally use – they both understood it immediately and as a parent I am proud to say they already make their fair share of tough choices.

On the eve of Tributum’s second birthday (yes, it has been 2 years already), I am humbled by where we are, I am thankful for the opportunities, I am grateful for the clients and support network and I am excited for the future.  Thank you for the role that all of you have played, even if its just through reading this newsletter. Until next time, stay safe.