#Budget2016 / The government’s 2016/17 Budget came at a time when the South African economy has not only stagnated, but is shedding jobs at an alarming rate.
The ongoing retrenchments are adding to the long list of the unemployed with no source of income, and to the number of workers looking to the government’s social safety net to keep them afloat.
Read: The full round-up: #Budget2016
The minister of finance had the unenviable task of reconciling the competing claims of social partners, while also constrained by a budget shortfall in spending.
Overall, we as workers feel that the Budget was reflective of the state of our economy and we feel that the minister did a commendable balancing act.
He stood firm and resisted extreme calls by neoliberal hardliners for the government to impose excessive voluntary austerity measures.
Some people had suggested that we hand over everything to big business through privatisation and punish the poor through VAT, income tax increases and cuts in social spending.
Despite this intense pressure from the rating agencies and various right-wing commentators, the minister tread carefully and came out with a sober Budget.
Although he shied away from commenting on the Presidential Review Commission’s call for partial nationalisation of state-owned enterprises (SOEs), he did reiterate the old myth of a public service wage bill that is a problem.
The public service wage bill has been blamed for all the economic ills of this country, but people have failed to address the question of who is responsible for this growing wage bill.
Lowly public servants have been vilified and demonised as unproductive and greedy culprits responsible for the ballooning wage bill. The reality is that it’s the top layer of government bureaucracy that is responsible for the bill.
Any excessive austerity measures at the expense of economic stimulus and growth would have been counterproductive. The country’s fundamental challenge remains the perennial 34 percent unemployment rate. If we fail to properly address it, we won’t be able to tackle and reduce our massive levels of poverty and inequality.
Radical approach
What is patently clear is that the government’s National Development Plan is not achieving the economic targets we need. It is not creating the 100 000 new jobs needed per year. We are now seeing inflation push upward towards 7 percent and this is a crisis for workers.
The answer to all these challenges is a radical approach that will move away from the current approach of tinkering with the system.
While we all appreciate the government’s efforts to increase revenues, stabilise debt levels, reduce the deficit and prioritise infrastructure and service delivery, unfortunately this current economic framework will not deliver the economic growth and job creation levels that we need to develop as a nation.
The solution is to use the SOEs as vehicles to transform the economy and deliver services to the people.
The radical second phase calls for a state that will nationalise some of the strategic sectors of the economy and use subsidies and incentives to direct investment towards sectors of the economy that will create decent and permanent jobs.
Our economy needs to be restructured in how it is controlled and also its patterns of ownership reorganised to accommodate the previously oppressed black majority.
We need to bring more people in the economy using land reform and a state bank to finance small businesses. We should also abandon the current conservative macroeconomic framework.
Taxes
We believe as workers that the government can significantly increase revenue and thus provide more resources in support of economic stimulus, job creation and developmental objectives, if we introduce a progressive tax system with an introduction of a tax category for the super rich.
The government can introduce a solidarity tax to cap the growth of earnings of the top 10 percent and to accelerate the earnings of the bottom 10 percent.
We can introduce tax on both domestically produced and imported luxury items, with a higher tax on luxury items that are imported.
We need to increase the dividends tax to encourage re-investment, job creation and to reduce the financialisation of company assets. We can impose land tax to aid the process of land redistribution and zero-rate medicines, water, domestic electricity and public education.
The government has to introduce export taxes on strategic minerals, metals and other resources to support downstream industries and to promote value addition and also introduce investment tax credits to encourage local procurement of machinery and equipment.
We can also increase taxes on financial transactions, such as capital gains tax above certain levels, to limit short-term capital flows and to encourage productive investment.
The state needs to tax firms that pay below the statutory minimum wage; introduce tax on firms that resist closing the wage gap and then distributing such tax proceeds back to the workers concerned.
* Bheki Ntshalintshali is the general secretary of Cosatu.
** The views expressed here do not necessarily reflect those of Independent Media.
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