Home South African #Budget2021 What labour, political parties expect to hear

#Budget2021 What labour, political parties expect to hear

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The focus should be on providing much-needed funding for vaccines, but not to squeeze the labour force with a tax increase.

Minister of Finance Tito Mboweni. Photograph; Phando Jikelo/African News Agency(ANA)

Johannesburg – Political parties and labour unions say Finance Minister Tito Mboweni’s budget speech should focus on providing much-needed funding for vaccines, but he is being warned not to squeeze the labour force with a tax increase.

Mboweni will deliver his budget for the year this afternoon. The budget takes place under different circumstances, with an economy that has been hard-hit by the Covid-19 pandemic.

Statistics South Africa has announced a rise in unemployment, which now sits at 32.5%.

Economists believe Mboweni’s speech should focus on fiscal policy and providing a vision for the country’s path to economic growth.

Dr Nthabiseng Moleko, from Stellenbosch University, said the budget should provide a policy perspective for propping up the country’s economic output.

“It (budget) should lay out a vision for how economic growth will happen – but inclusive economic growth that will not only see an increase in economic growth, but will see unemployment levels improve,” she said.

University of Johannesburg Professor Miriam Altman said what would be important for this budget was on the issue of fiscal policy. She said what Treasury aims to do about rising debt levels would be of importance.

“For the budget, we are going to want to see if they have a grip on public finances. And one of the markers for that is if the debt to GDP ratio is going to be higher than it was in October, as put forward in the medium-term budget policy statement.

Debt has been rising and you expect it to rise in this context. The problem is, currently, not that debt is high – but rather that we do not seem to have a grip on it,” Altman said.

On the labour front, Cosatu said that although the country’s debt levels were high, this was no excuse for the government to cut much-needed spending to push economic growth.

The trade union federation said Mboweni should see to it that the public sector wage freeze is abandoned.

Mathew Parks, Cosatu’s Parliamentary coordinator, said this speech should also outline a plan to deal with the country’s SOEs.

Cosatu said a further tax increase would overburden the working class and that the focus should instead be on those who hide their wealth through illicit means.

Fedusa said Mboweni will have to balance out finding the funds for vaccines, but warned that raising taxes was not an ideal option for sourcing revenue.

“Raising income tax or increasing VAT, even if it is by a single percentage point, will overstretch a labour force that has already been hit hard by massive retrenchments, wage cuts, deeply reduced hours of work and furlough, or unpaid leave,” it said on Tuesday.

On the political front, similar warnings about tax rises have been highlighted. UDM leader Bantu Holomisa said this was not an option.

He said Mboweni should instead focus on spelling out how he plans to implement the promises delivered by President Cyril Ramaphosa during his State of the Nation Address address.

“He must make reference to the plan that was outlined by the President during Sona. And tell us how he will finance that plan. If his budget does not talk to Cyril Ramaphosa’s plan, then they are useless for me,” Holomisa said.

DA MP Geordin Hill-Lewis said if the country’s cost of debt and the debt itself was not brought down, the ripple effects for spending on social services would be massive and dire.

The party wants priority in the budget for vaccines and spending on social services.

Freedom Front Plus MP Wouter Wessels said the party would like to see a focus on economic recovery and tax relief.

“The FF Plus would like to hear, among other things, tax relief measures announced for individuals and business enterprises, to stimulate economic growth. That is the only way to move forward with economic recovery. In addition, private spending must be stimulated to bring about growth, which will lead to job creation,” Wessels said.

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Political Bureau