Medium Term Budget raises concern

Corporate tax reduction, under spending by government departments and lack of skills, was a matter of great concern to opposition parties during debate on the Medium Term Budget Framework in Parliament last night.

The Budget Framework makes provision for a budget increase of R78.3 billion over the next three years. It seeks to increase social spending and improve public infrastructure.

The majority of political parties supported the Budget Framework, but with reservations. The IFP said the problem facing government was not lack of funds but skills shortages. "The IFP believes that immigrant skills are only a short term intervention the long term solution is further education and skills training," says Themba Vezi, from the IFP.

The official opposition said the private sector investment remains a crucial factor in job creation and economic growth. It criticised government for not having a tax reduction incentive to encourage private sector investments.

"We call for government to commit itself to a multi year tax reduction to bring the corporate tax rate closer to 25%. This we believe will send a powerful signal and fuel the private sector engine as far as growth was concerned," says Ian Davidson, from the DA.

Trevor Manuel, the finance minister, has rejected this and said there is more than enough incentive to people to invest in the country.