The amended budget tabled by the Minister of Finance, Enoch Godongwana, is a victory for multiparty democracy in South Africa.
It is a shining example of how the Government of National Unity (GNU) can indeed have a significant influence on government decisions in the interest of the people.
The harsh reality of South Africa’s fiscal crisis is that there is a massive budget deficit and unsustainable public debt. The only way to adequately address this crisis, unemployment and poverty is to facilitate sufficient economic growth. In order to do that, the budget has to be spent wisely while all forms of wasteful expenditure are eliminated.
The Freedom Front Plus (VF) is strongly opposed to any form of tax hike, particularly VAT, which is a regressive tax and has the greatest negative impact on the poor.
Low-income households would be forced to spend an even greater portion of their disposable income on consumables. These are people already struggling to afford basic necessities, like bread, and only a heartless government would proceed to implement such a measure amid the current difficult economic circumstances.
The Freedom Front Plus is pleased that it publicly objected to a VAT hike from the start and for the role it played in preventing it. Such an increase would have further paralysed the economy and put smaller businesses under even more pressure.
South Africa finds itself in such a dire fiscal position that any short-term measures aimed at boosting the fiscus offer more cons than pros.
The party continues to advocate for alternative solutions, such as a sharp reduction in government expenditure coupled with the eradication of corruption.
The Freedom Front Plus is pleased that its proposals regarding constructive solutions to stimulate economic growth and promote cost-effective state expenditure have been incorporated into today’s budget.
A good example of this is the reduction in funding for the Defence Force’s failed DRC mission.
The party felt that it was crucial not to replace the proposed VAT hike with another form of tax increase or levy. The fiscal framework ought to create a favourable environment that stimulates growth.
It is, therefore, regrettable that an additional tax burden, of 16c on petrol and 15c on diesel, has been placed on motorists through a higher fuel levy.
It is not ideal and will hamper economic growth. State expenditure should have been cut back, instead. Once a hike has come into effect, it is here to stay – and the same is true for the damage it causes.
With the world’s eyes fixed on South Africa, it is time to break free from this fiscal crisis, brought on by a growing budget deficit and unsustainable public debt, through implementing sustainable plans.
Every public role-player has to do their part to use funds cost-effectively, while taking decisive action to combat corruption and wasteful expenditure. The GNU has a significant role to play in this regard and the Freedom Front Plus will actively contribute.
