FF Plus reaction to the Budget 2015/16

2015-02-25
Dr Pieter Mulder

It is a sad day if government finds it necessary to increase personal income tax with one percent for the first time in twenty years. It means that government had succeeded in balancing the books through other methods during the recession period and during other periods in which it experienced setbacks, but it is no longer capable of doing it. If taxes have to be increased, the FF Plus would have preferred that VAT is increased by 1%. Such and increase would have raised R18 to R20 billion which could provisionally have solved government’s shortages while all South Africans would have made a small contribution. Now a small group of income taxpayers are being targeted to carry the burden. If the same cow is consistently milked, the cow will dry up or stop providing jobs and revenue.

The continuous assistance given to public enterprises such as Eskom and SAA, without any plans to make them more independent through, for example, privatisation does not solve their problems. They are becoming like naughty, spendthrift children who never become independent because they know their parents will continue to rescue them.

The centralisation of certain government acquisitions such as text books is an attempt to combat corruption. Any measures to combat corruption are welcomed. The risks are however great that the public service does not have the administrative capacity to prevent such a central acquisition process eventually becoming a bottleneck which will be prejudicial to the whole country rather than just harming one province.

Attempts to encourage the establishment of more small businesses through tax exemptions are welcomed. With all the other restrictions such as power shortages and government red-tape still present, it will have to be seen to which extent the minister succeeds in having more small enterprises established.

The minister foresees that government debt in 2017 will rise to R2,3 trillion. It is difficult to envision this amount. In this budget, R153 billion is budgeted just to pay the interest on sovereign debt for this year. The future concern is that with an economic growth rate of 2%, government will not be capable of getting South Africa out of this debt trap.

 

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