Unpacking the “balanced” budget

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MANCOSA, in partnership with the Sunday Tribune, hosted a post-budget speech breakfast on 22 February 2018, at the Graduate School of Business in Durban. A diverse panel of economic experts and political analysts, including, Professor Dilip Garach, Mr Jackie Shandu and Mr Paul Jones unpacked Minister of Finance, Mr Malusi Gigaba’s budget speech. The tax analysis, presented by Professor Garach, revealed that the country will actually see a shortfall of close to R 70 million. Towards this end, VAT had to increase to 15% and the enormous fuel levy increase of 52 cents also seemed to be inevitable. These interventions are probably the easiest means to covering some of the budget shortfall. However, Garach went on to ask: “where will the remaining revenue come from?”

Garach pointed out that “…over the past few years, the delivery of the budget speech has been a difficult task for the many individuals that have been elected in the position of Finance Minister of the South Africa”. However, the difficulty in balancing a budget with a massive deficit ultimately means that income tax will continue to increase, especially for the wealthy.

Political commentator, Jackie Shandu, began by pointing out that economic policy adopted by the ANC appeared to be misaligned with ANC party policy. Shandu said that “the state is dictated to by big businesses. As long as the ANC does not have the courage to break the monopolies, as long as there is this unethical relationship between politicians and big business, you can say all you want about small business development and economic growth, the space is not going to be created because the ANC government refuses to create space for new players.” He concluded by stating that, the vast majority of South African are left out of “free trade” advantages. He talked about the challenges in Parliament in late 2017 and the delivery of the SONA and budget speech proposals in 2018, where he mentioned the confusion among South Africans on land expropriation, calls for free education and the nationalisation of the reserve bank, which are the current issues the ANC needed to address.

Director of Lumec, Mr Paul Jones, said that the budget speech was a step in the right direction, however there is no protection for the poor. He stated that from a socio-economic perspective, the country needs to implement policies aimed at growing small businesses intolarger entities. To boost the economy, the use of stronger value chains to combat unemployment, equality and poverty was required. Mr Jones also stated that much of city developments are not aligned with the local citizen’s best interest at heart.

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