NATIONAL ASSOCIATION OF AUTOMOBILE MANUFACTURERS OF SOUTH AFRICA

PO BOX 40611, ARCADIA 0007
TELEPHONES: (012) 323-2980/1 – 323-2003
TELEFAX: (012) 326-3232
WEB ADDRESS: www.naamsa.co.za
E-MAIL ADDRESS: naamsa@iafrica.com
OFFICES: 1st FLOOR, NEDBANK PLAZA
Cnr CHURCH AND BEATRIX STREETS
ARCADIA, PRETORIA 0083
 

                                                                                                                      15^th February, 2006  

NAAMSA MEDIA RELEASE ON THE 2006/2007 BUDGET:

FOR IMMEDIATE RELEASE

 

Commenting on the budget proposals announced by the Minister of Finance, Mr T Manuel, in Parliament today – the President of the National Association of Automobile Manufacturers of South Africa (NAAMSA), Dr Johan van Zyl said that against the background of strong domestic economic fundamentals, a positive global environment and a cash flush fiscus – the Minister was again able to present a package of budget proposals which should place the South African economy on a sustainable higher growth path.  The favourable position of Government’s finances had enabled the Minister to introduce significantly increased funding for a broad range of social priorities and infrastructural development whilst, at the same time, granting personal income tax relief to the extent of R13,5 billion and abolishing regional services council levies which would benefit the corporate sector.  

Overall, the proposals represented a confidence building budget which would support consumer expenditure, stimulate investment, economic growth and development and employment.   The budget proposals were also consistent with the important objective of providing continued stability and predictability in government policy.  

With specific reference to the automotive industry, Dr Van Zyl said that the full effect of the changes to the car allowance taxation provisions (announced in last years budget) would be felt by taxpayers in the current year of assessment.  Moreover, the increase in the deemed fringe benefit on a company car from 1,8% of the determined value to 2,5% effective 1^st March, 2006 as well as the increase in the proportion of the car allowance subject to PAYE from 50% to 60% were cause for concern to the automotive industry.   Specifically, the industry anticipated that there would be changes in consumers’ vehicle purchasing decisions and demand patterns with the most pronounced impact likely to be felt in the premium/luxury vehicle segments.  NAAMSA intended to recommend that National Treasury should commission an independent study to establish the overall impact of the changes on the South African automotive market and structure.  Dr van Zyl acknowledged that the individual income tax relief granted in this year’s budget would go some way to offsetting the higher fringe benefit tax burden on motor cars.   

In conclusion, Dr van Zyl anticipated that, on balance, the budget proposals should positively influence business confidence and consumer spending in South Africa and would be well received by taxpayers.   

NAAMSA OFFICES: PRETORIA

15^th February, 2006

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