‘No plan’ to fix mess
EXIT CARD: NEW CORPORATE TAX
‘No silver lining’ and ‘uninspiring’ say opposition.
Opposition parties were yesterday mostly damning Finance Minister Enoch Godongwana’s budget. DA shadow minister of finance Dr Dion George said the budget was “another indication of a panicking ANC government that has no plan to accelerate economic growth, resolve relentless blackouts, stabilise debt, reign in runaway expenditure, support vulnerable South Africans and combat corruption”.
“The DA notes the minister’s announcement of government’s support for private-public partnerships to rebuild South Africa’s crumbling infrastructure,” George said. “Yet, there is a notable absence of a coherent plan to fast-track this initiative.”
He also noted there appeared to be no further direct bailouts to state-owned enterprises and no additional funds allocated to the “doomed NHI”.
“This is where the good news ends,” George said.
“Government has further adjusted its growth forecast downward to 0.6%, significantly impacting revenue collection and the funds available for service delivery – revenue is R56 billion lower than expected this time last year.
“Load shedding and the crisis in our logistics sector has also impacted revenue generation significantly.
“Revenue generated from the mining sector decreased by 39.2%, while revenue generated from manufacturing decreased by nearly 6%.
“The minister could very easily have expanded the zero-VAT rated basket of food to bring immediate relief to South African households. He could also have reduced the taxes and levies on fuel which would have provided further relief,” George said.
There was no silver lining to South Africa’s dark fiscal cloud, said Freedom Front Plus MP Wouter Wessels.
“Government debt for the 2023-24 financial year is R84 billion [nearly 18%] more than what was originally projected and currently stands at R470 billion. The budget deficit for 2024-25 is an estimated R320.9 billion,” said Wessels.
“Overall government debt for 2024-25 is expected to climb to R5.5 trillion with financing costs amounting to an estimated R380 billion, which is more than a billion rands per day.
“On top of that, government’s wage bill amounts to R754 billion of the total budget of R2.37 trillion,” Wessels said.
“When it comes to infrastructure development, the minister’s actions demonstrate that he is only paying lip service.”
Wessels said the universal minimum corporate tax rate to be introduced over the next few years would be detrimental to business’ growth and erode investor confidence.
“A tax rate of 15% will be imposed on multinational businesses with an annual revenue of more than €750 million (about R15 billion), regardless of whether those profits were generated in SA or not,” he said. “It will result in an exodus of international companies invested in the country.”
ActionSA’s Herman Mashaba called the budget “uninspiring”.
“The ruling party lacks the political will to cut funding from non-strategic programmes, such as the R3.7 billion VIP protection budget. The economy needs urgent, innovative interventions to get us back on track.”