Minister Pravin Gordhan needs to prove on Wednesday that this year’s Budget will address and support government’s Radical Social and Economic Transformation Programme; this is apart from the normal balancing act he faces.
Gordhan needs to convince South Africans that (and how) Treasury will implement the goals of the National Development Plan (NDP) and deracialise the South African economy.
This all given the broader challenge of keeping the budget deficit to gross domestic product below 3.2 percent and National Debt lower than 50 percent of GDP to satisfy the international rating agencies.
Gordhan indicated, in the medium-term budget policy statement, that he will introduce tax measures to increase the total tax by R28 billion with new sources of taxes in the amount of R13 billion.
Given the political risks of any increase in VAT, it is expected that extra increases in the fuel levy, income taxes, sin taxes and possible capital gain taxes and dividend taxes will be introduced. And that VAT will be untouched.
President Jacob Zuma highlighted the critical importance of a growing South African economy during the State of the Nation address on February 9 “so that much-needed jobs are created”.
A rapidly growing economy is needed for the successful implementation of the radical economic transformation programme that we all know must be implemented as soon as possible.
What is radical economic transformation?
Nothing else than a fundamental change in the structure and system of ownership, management and control of the economy in favour of particularly poor (black) South Africans.