Gordhan negotiated economic minefield well with budget

In his distinctive level tone, Minister of Finance Pravin Gordhan might not have spelt out an enduring blueprint for the radical economic transformation from President Jacob Zuma’s State of the Nation address last month, but the footprints of the ideal were there for all to see as the budget speech rolled out in the House of Assembly.

Yes, the rich, at least those earning more than R1.5 million a year – and this will affect more than 100 000 South Africans – face a hike in what the Receiver will expect from them.

Sugar tax is unlikely to curtail the creme brulee, or the sin taxes the cigars and cocktails in this high-end community.

But these increases were to be expected, given the pressure cooker of an underperforming economy, creaking under the burden of high unemployment.

And yes, the poor have, for the time being, been saved from having to fork out more for basics through an increase in VAT.

This might not fully appease the unions, who have been vocal in their opposition of a higher direct tax at the tills. But this will likely be eroded in the higher tax at the fuel pumps as transport and delivery charges escalate to compensate.

But, as ever, the middle class, who have borne the brunt of the tax burden for years, will also be feeling the pinch. Given the drive to this new radical economy, this was also to be expected.

As ever, the price of petrol – essential in our environment – and the costs of life’s little pleasures, remain a softer target than the more weighty issues of government spending.

Gordhan has proved to be a pragmatic tactician in his handling of the emotive economic minefield presented by a Cabinet perhaps more deeply divided than the intensely riven ruling party as a whole.

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