South Africa finds itself in an enormous financial crisis with insufficient economic growth and an unsustainable budget deficit. It is, however, short-sighted to think that increasing state revenue through a tax hike will adequately address the budget deficit.
Hundreds of billions of rands are lost due to the costs related to Black Economic Empowerment (BEE), which compels government to pay more than market value for goods and services. Government and the people are exploited through the policy of BEE.
Taxpayers, who are already overtaxed, should not be punished for the failures of the past, corruption, state capture and poor policy directions.
So, it is regrettable that the Minister of Finance, Enoch Godongwana, proceeded to announce an increase in Value Added Tax (VAT), albeit half a percentage point. This increase will naturally have less of a negative impact than the initially proposed hike of 2%.
The Freedom Front Plus (VF Plus), however, maintains that a VAT increase in any form is detrimental and will hamper economic growth. Tax relief should be offered instead to ensure sustainable growth.
Minister Godongwana is well aware of the fallout of the previous VAT hike, which showed that the public, and companies in particular, are already overtaxed and consequently spend less following tax hikes. It also leads to tax evasion.
The economy is stagnating, unemployment keeps rising and the population is growing fast. The fact of the matter is that money needs to be found somewhere.
For now, there are no other increases, such as hikes in the fuel levy, but there is also no relief, such as inflation adjustments for personal income tax.
The Freedom Front Plus is convinced that the only solution is sustainable economic growth and cost-effective state expenditure.
The ANC’s policies and misguided priorities crippled the economy over the last thirty years.
Over the years, money was lost on large scale through corruption and squandered on bankrupt public enterprises.
Billions could be saved if the premium paid for BEE is done away with.
Ordinary South Africans are paying the price for BEE, which is nothing but cadre enrichment through inflated prices for goods and services, running counter to all sound economic principles.
The main objective of the Government of National Unity (GNU) is economic growth and job creation. So, as a partner of the GNU, the Freedom Front Plus will keep advocating for policy changes to achieve this objective.
Better policies, without BEE and expropriation without compensation, are needed to stimulate economic growth.
