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Over the first half of the month, stocks were buoyed by upbeat US economic figures and easing concerns over Europe’s debt crisis as Greece received its second bailout. However, by mid-month the rally flagged amid concerns over China’s economic growth, Spain following in Greece’s footsteps and the impact of high oil prices on global growth.

The 2011/12 Budget brought some surprises, both in what it mentioned and in what it omitted. As expected the focus was largely on the economy, job creation and infrastructure spend. There was no clarity on retirement fund reform, while the national health insurance is to be phased in over 14 years. On a negative note further re-distributive measures include a hike in capital gains tax and a 50% increase in the tax on dividends.

2011 ended on a flat note, with investors anticipating a turbulent 2012 after the European Union prioritised austerity over growth. After an inconclusive EU summit which saw the UK isolated, German Chancellor Angela Merkel and French President Nicolas Sarkozy are to meet in January 2012 to discuss a new fiscal treaty. The only source of optimism was the US where the economic picture continued to brighten. Political uncertainty in Iraq, Syria and Russia added to the murky picture of the future.

The draft Taxation Laws Amendment Bill, 2011, is hereby published for comment. The draft legislation gives effect to matters presented by the Minister of Finance in the Budget Review 2011, as tabled in Parliament earlier this year.