On 25 February 2015 Minister of Finance, Nhlanhla Nene, presented the first Budget of the fifth South African Government as well as his maiden “*Budget Speech*(Download Budget Speech here from Into SA eLAW Library)”:https://www.into-sa.comhttps://www.into-sa.com/uploads/download/file/445/Budget_Speech__2015_.pdf. His increasingly confident delivery of a budget with hardly any surprises stayed far behind any expectation and might as well be filed right after Zuma’s State of the Nation Address just a few days earlier in a box labelled “Not worth the time listening” and rather in line with the title of the book “Tax, Lies and Red Tape” by Chief Economist of the Efficient Group, Dawie Roodt.
The Budget was delivered on the basis of unrealistic assumptions of a higher GDP growth, reduced unemployment and reduced government spending. It was not a budget, it was a wish list, but sorry, Christmas has gone. While Nene stuck to a slightly humorous rendition and pleasing by changing languages a few times in his speech, he appeared more like a jellyfish, slippery and difficult to hold to one point. His speech was the least transparent budget speech in more than a decade and “We will see” should be the comment of a palm reader rather than a Minister of Finance.
South Africa is suffering! The recent financial crisis, strikes, a strong Dollar and of course the energy crisis are weighing heavily on the economy. The 2014 GDP rose by 1.5%, a whole percentage point below Pravin Gordhan’s forecasts in February 2014. It is more promising to dream of a White Christmas in Gauteng than of an increasing GDP over the next 12 months!
The energy crisis is not resolved and COSATU has already announced a 15% wage increase demand in the upcoming Civil Servants’ wage negotiations. And who told you that the strike in the Platinum Industry was the last in commodities? Gold, Iron and even Coal Mines are preparing for the battlefield while you are dreaming of Lala-Land. The revenue will not live up to your expectations and you missed the golden opportunity in a time, where public as well as experts were clearly expecting tax increases. We do not say that we want higher taxes, but in these times it was to be expected that you raise some of them, but failed to do so. The 1% private income tax rate increase does hardly count as it is mostly compensated for by changed thresholds, and also the increased transfer duty for property transaction above ZAR 3m will hardly make an impression. Value-added Tax, Capital Gains Tax, etc. remained untouched.
Your public wage bill cut of 25bn Rand is another dream. The cost of government has almost tripled over the last decade and you really think that any of your colleagues or their departments will cut costs? Dream on!
The revenue outlook for this country is only overshadowed by its devastatingly increasing debt burden. What Trevor Manuel brought down over almost a decade you and your predecessor wiped out in just three years and we are facing the highest indebtedness in a long time and interest payments on state debts account now for 13% (after 10% in 2014) of the expenditures. You failed to address a perfect sound and now prudent way to get the funding issues under control: Why is the shareholder of Telkom, Vodacom, ESKOM and SAA, the South African Government, not selling its shares to reduce debt? No, to the contrary, you continue stuffing 250bn Rand down ESKOMS proverbial “black” hole and feed Postal Services and SAA so that the fat cats can get fatter but without any public benefit. Did you realise that the average cost to company for any ESKOM employee has reached an annual 600 000 Rand?
Do you recognise that besides 20% of your budget going into education that unemployment has not made progress? But therefore we have now the number of social grant receivers exceeding (!) the number of employed South Africans. And those who work do pay taxes…..sickeningly only 1.8% of the tax payers are paying one third of all personal income taxes collected by SARS, while only 0.9% of all corporate tax payers foot two thirds of the revenue bill collected from Corporate Income Tax.
Increasing sin taxes has long become the joke of the Budget Speech, but we think the laughing will stop as soon as your 81c fuel levy increase will hit the road on 1 April. Together with the oil-price-linked petrol price hike of another 90c the motorist will have to fork out 15% more per litre than today. We know it does not phase you as your petrol is paid also by the taxpayers.
Minister Nene, your budget is a disgrace for the country and yet another proof that the government is not in the business of governing anymore, but rather lining their and their goons pockets as long as possible. Hopefully this will be the last term we have to endure your smugness, the presidents’ tolerance of a violated democracy and the government-wide ignorance of the problems the country is facing. We fondly remember the slogan under Mandela’s reigns: “Simunye!” – “We are One!” … Long gone the time we build anything together. We build, you destroy. We govern ourselves, you travel, spend and ignore. We are not one anymore and we need a government that works with its peoples and not against them. 2019 will come, hopefully until then there is enough left to build upon!