DA, EFF reject GNU budget

The DA has stuck to its guns regarding its stance on the previously mooted and now confirmed VAT increase, saying it rejects it completely.

The party believes it made its view clear to its ANC colleagues that it will not support any increase in taxes, unless temporary – to which it is argues would need to include a series of major reforms that would grow the economy, create jobs, reduce waste and bring down taxes within three years.

Dismayed at the outcomes tabled by finance minister Enoch Godongwana, DA leader John Steenhuisen says the ANC insisted on two likely permanent VAT increases, which cumulatively will increase VAT by one percentage point over the next two years.

“As a consequence, the people of South Africa will be poorer, and the future of the government is at risk. It is deeply unfortunate that the ANC is prepared to sacrifice the South African people and risk the economic future of the country rather than accept it no longer has majority support,” he said.

Steenhuisen slammed the former ruling party, accusing it of still suffering from a governing party hangover.

“The underlying problem is that the ANC has still not accepted the outcome of the general election and cannot bring itself to share power. The ANC VAT budget doesn’t have a majority, and the DA won’t give it one. It is now up to the ANC to fix the mess it has created,” he said.

The FF Plus echoed the DA’s sentiments, calling it “short-sighted” to believe that increasing state revenue through a tax hike will adequately address the budget deficit.

Instead, the party’s national chairperson Wouter Wessels has pointed fingers at the racial redress policies as the root cause of the crisis facing the country.

“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. The 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,” he said.

Despite being unclear whether it will give Godongwana’s budget the green light ahead of the much-anticipated vote, the party maintains that an increase in VAT, albeit half a percentage point, is detrimental and will hamper economic growth.

“This increase will naturally have less of a negative impact than the initially proposed hike of two percentage points. 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 after tax hikes. It also leads to tax evasion.”

Calling the finance minister’s actions regrettable, the party conceded that money needs to be found somewhere.

“South Africa finds itself in an enormous financial crisis with insufficient economic growth and an unsustainable budget deficit. 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 red berets came out blazing at Godongwana, slamming his budget as shameful and right-wing neoliberal.

In a statement, the EFF accused the finance minister of handing over government fiscal policy to “the parasitic white capitalist establishment, capitulating to the whims of the National Treasury while offering nothing to the poor and working class”.

“The shameful budget, finally tabled after an embarrassing inability to do so last month due to internal GNU squabbles, is the final nail in the coffin of the economic struggles facing the poor and working class while there are all sorts of promises for the parasitic white capitalist establishment.”

Rejecting the VAT increase, the party predicted that there will be an attempt to propose a one percentage point increase after testing the public response and sentiment to the outrageous two percentage point proposal three weeks ago.

“We want to assure South Africans that a delayed and prolonged increase in VAT over a two-year period remains detrimental to the poor and the middle class and remains an unviable option to generate revenue.”

The EFF called on all MPs and opposition parties to engage in collective and bilateral engagements across party lines to use the Money Bills Amendment Procedures and Related Matters Act of 2009 to amend the proposed fiscal framework and revenue proposals contained in the budget.

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