The minister of Finance’s budget can be described as a “back to basic economic fundamental truths”.
The minister emphasised fiscal discipline with the intention of saving billions of rand through better control over procurement and savings. These are steps in the right direction.
The measures surrounding state owned entities are also welcomed as steps in the right direction. Although he does not want to describe it as privatisation, he proposes partnerships with the private sector, rationalisation and the phasing out of some entities, which can be viewed as definite steps toward privatisation.
The same ANC which brought SA to the brink of a junk status by taking wrong economic decisions in the past couple of years, is now trying to get the country out of the mess by applying basic economic fundamental truths. The question is whether it isn’t too little too late.
Although the minister has made funds available for universities, he was not prepared to announce drastic drought relief. There were a number of vague promises that the matter will be receiving some attention, but it will be too late to save many farmers. If large numbers of farmers are off their land as a result of the drought, it will take decades to restore food security.
The FF Plus would have preferred a VAT increase instead of the many smaller increases covering the whole spectrum, which have now been announced. A VAT increase would have broadened the tax base. South Africa is running the risk that the same five million South Africans who are currently paying personal income tax will be overtaxed. One cannot milk the same tax cow over and over again and think that it will not dry up. Overtaxing these individuals may dampen economic growth and even contribute to speeding up a possible recession.
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