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Political parties concerned about possible tax increases

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Political parties in Parliament expect Finance Minister Malusi Gigaba to strike a delicate balancing act between government’s spending priorities and the burgeoning budget deficit. The majority of political parties in Parliament agree that Gigaba will have an unenviable task when he delivers his Budget Speech.

Gigaba will deliver his Budget Speech amid a growing budget deficit and slow economic growth. He also needs to plug the hole of about R50.8 billion revenue shortfall.

“We are all concerned about where the additional revenue is going to come from and concerns about the relative value of increasing VAT as against personal income tax and customs and income excise duties. I think that will be the key thing where the money is going to come from for free education,  for those who are needy and for national health and other major projects of government,” says Chairperson of the Standing Committee on Finance, Yunis Carrim.

There are expectations for Gigaba to announce an increase in taxes to fund this shortfall. However, some political parties are totally against any tax hike.

Democratic Alliance leader Mmusi Maimane says his party will reject any form of tax increases and has instead called for the privatisation or partial privatisation of some State Owned Enterprises (SOEs).

“We must stabilise public finance by announcing a package of austerity measures and a comprehensive spending review. We must review the integrity of institutions by firing Tom Moyane. We must reform SOEs by privatising or part-privatising Eskom and ultimately we must mitigate the long term financial risk by terminating the nuclear programme and NHI. Our whole campaign is to look at how to create jobs and to assist in the growth of the economy so that more people can be employed.”

The Inkatha Freedom Party says it is about time that Gigaba trimmed the fat and deal decisively with irregular and wasteful expenditure by various government departments and state owned entities. The party’s Member of Parliament Mkhuleko Hlengwa says SOEs are the biggest burden on the national fiscus.

“The minister must above all else plug the hole, the budget deficit remains the biggest headache for South Africans and if the minister does not consider the ramification on the poor.”

United Democratic Movement Chief Whip Nqabayomzi Kwankwa says Gigaba must make sure that the budget does not negatively affect the poor.

“What we will not accept from the minister is a decision to increase VAT which is extremely regressive, which is going to affect the poor. We expect the minister to tell us what his job creation strategy is going to be and sort out the mess at SOEs.”

National Freedom Party Chief Whip Nhlanhlakayise Khubisa says his party is eager to see how Gigaba hopes to fund social projects.

“Funding free higher education, he must be explicit, there is some cloud around it, the debacle around social grants, we want to see how jobs are going to be created.”

Meanwhile, the African Christian Democratic Party has warned South Africans to brace themselves for an unpopular Budget Speech, although the party is optimistic about prospects of economic growth under President Cyril Ramaphosa’s administration.

“We need to prepare for an unpopular budget with possible VAT increases, possible personal income tax increases as well as of course an increase in the fuel levy and sin taxes. We are hopeful that President Ramaphosa’s administration will inspire business and investor confidence which will in turn stimulate economic growth going forward but we must deal decisively with SOEs which are draining state resources,” says the party’s Steve Swart.

Those who are against tax hikes are calling for the public sector wage bill and cabinet to be trimmed.

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