South Africa’s farmers are hoping for a spirit-lifting budget speech from the finance minister, Enoch Godongwana. As far as agriculture is concerned, Godongwana’s budget should reflect a government that is serious about saving agriculture, rural jobs and livelihoods.
Godongwana will be delivering his 2023 budget speech on Wednesday, 22 February.
Amongst other things, the minister is expected to announce another bailout for Eskom, and a possible increase in the health promotion levy, or sugar tax.
Farmers are, however, also calling on considerations on a lower 2023 excise taxation on wine and alcoholic products, no increases in the general fuel levy and road accident fund levy, and rebates for farmers who fix public roads.
Cut back on taxes, please!
Vinpro managing director Rico Basson said the wine industry remained under severe pressures brought on by local and global shocks. These shocks could potentially reduce wine profits for 2023.
“The wine industry would like to highlight the need that considerations for the 2023 excise taxation on wine, sparkling wine and brandy, should be less or at a maximum equal to inflation for 2023,” Basson told Food For Mzansi.
According to Basson, this, combined with other interventions as agreed in the Agriculture and Agro-processing Master Plan, will enable the wine sector to continue playing its vital role in society.
“Any additional financial strain on an already low-profit environment could negatively influence employment conditions, particularly seasonal labour,” Basson added.
This comes when the wine industry is projected to have a smaller harvest this year.
Sugar tax concerns
Meanwhile, cane growers in the country are also hoping for leniency on the government’s “unsubstantiated and disastrous” sugar tax.
“The planned increase in the health promotion levy will cost the sugar industry more than 6 000 jobs and jeopardise the businesses of nearly 3 000 small-scale growers.
“This adds to the total of more than 16 000 jobs and R2 billion lost because of the levy in the first year of its implementation alone,” the South African Canegrowers Association wrote in a statement.
According to SA Canegrowers, National Treasury needs to comply with legislation, and be transparent with the sugar industry.
SA Canegrowers has written to the chairperson of parliament’s standing committee on finance requesting oversight into the national treasury’s policy-making regarding sugar tax.
This follows the failure of National Treasury to respond to a request to provide the reasoning behind the ongoing implementation and the planned increase of the levy.
This request has also been made ahead of the minister’s speech this week. He is expected to announce whether the increase in the health promotion levy will take effect on 1 April 2023, as previously announced.
Eskom bailout, fuel rebates
Nedbank senior economist Isaac Matshego said Eskom is likely to be a focus in this year’s budget speech.
“We expect Eskom to receive another bailout, while Transnet is also likely to get an allocation,” Matshego pointed out.
“We expect the government to extend more financial support to stabilise the electricity utility’s financial position and allocations for the procurement of emergency power from private generators.”
Matshego believes Transnet will also receive a bailout to help it plug the spending gap created by the higher-than-budgeted wage settlement. As well as the damage to its rail network caused by the 2022 KwaZulu-Natal floods.
Agri Western Cape hopes that Godongwana will include the necessary measures and funding to address the country’s power crisis.
In addition, Agri Western Cape hopes for no increase to be made in the general fuel levy and road accident fund levy.
“Primary agricultural producers cannot afford an increase,” said Jannie Strydom, CEO of Agri Western Cape. “We, therefore, appeal to the minister not to increase these levies by more than the inflation rate this year.”
Agri Western Cape also hopes for an increase in the rebate on diesel used in power generation for agricultural activities.
“The agricultural industry, which plays a critical role in the South African economy, uses significantly more diesel than normal to ease the burden of load shedding. We, therefore, call on the minister to increase the current rebate for diesel used in generators,” urged Strydom.
Compensate farmers fixing roads
Meanwhile, Free State Agriculture’s commercial manager, Dr Jack Armour, said where farmers repair public roads, there must be some form of rebates.
“We accept that where farmers repair public roads themselves, most deduct the diesel and other expenses as part of their farming expenses for tax purposes.
“The same applies to crime and security expenses, if farmers have already included them in farming expenses, it must be a tax-deductible expense,” he said.
It is crucial that the minister announces measures to protect the country’s food security, Agri SA said in a press release.
“In particular, minister Godongwana must focus on providing higher rebates on diesel and petrol used for electricity generation. [As well as] implementing incentives to promote grid-connected generation capacity and reconnection of off-grid systems.”
Agri SA also said lowering or removing cumbersome taxes on struggling agricultural industries such as the excise taxes on tobacco, wine and beer as well as the health promotion levy, must be prioritised.
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