Business, workers unions and economists have spoken in one voice that Finance Minister Enoch Godongwana needs to provide a pro-poor Budget to alleviate the hardships that consumers have faced due to the rising cost of living in South Africa.
This year, the Budget speech will be delivered at a time when South Africans are already suffering from a skyrocketing cost of living and a persistent energy crisis that is essentially crippling economic growth potential.
Standard Bank’s head of cards and payments, Ethel Nyembe, yesterday said many consumers were facing significant financial pressure and would be hoping for some sources of support and relief after enduring price increases across the board, as well as load shedding.
“South Africans have been particularly hard hit by a challenging economic climate and higher cost-of-living, resulting in pressure on household finances and impacting people's ability to save,” Nyembe said.
“As such, the focus of this year’s Budget is expected to be on measures to address some of these challenges.”
There are fears that the government may impose an increase in specific existing taxes, such as income tax, and introduce new taxes that penalise lifestyles and income even further.
However, Liberty economist Zandile Makhoba allayed fears of possible tax hikes, saying there will likely be no surprise tax increases aside from some possible inflationary adjustments to personal income tax brackets.
Makhoba said Godongwana was aware that South Africans were struggling with household finances and he would be sensitive about putting further pressure on consumers.
“Unfortunately, some lessons were learnt in 2022 in terms of introducing tax relief. The fuel levy relief was reversed too quickly for households to truly benefit. While there may be efforts to provide some respite, the minister is likely to be cautious of significant revenue loss,” Makhoba said.
“This raises an interesting question about the state of welfare grants: If these grow by inflation, while revenue collection is expected to slow, it suggests there will have to be budget reallocations or else a widening budget deficit. This is not a good time to be looking to borrow, but it is also hard to tell where funds could be reallocated from.”
Godongwana has not endeared himself to the working class for continuing on the fiscal consolidation path, especially freezing government expenditure on increases in the public sector wage bill.
The South African Federation of Trade Unions (Saftu) said Godongwana should not implement an austerity budget that was tabled in the Medium-Term Budget Policy Statement in October.
“Saftu opposes neo-liberal solutions to the socio-economic crisis of capitalism, as these, unfortunately, worsen the plight of the working class,” said Trevor Shaku, Saftu spokesperson.
“Fiscal consolidation and structural reforms are enacted as part of attempts to create an ‘enabling environment’ for private capital... but also as a statement of commitment to neoliberalism on the part of the ANC.”
The Federation of Unions of South Africa (Fedusa) appealed to the National Treasury to take the necessary steps to make the R350 Social Relief of Distress (SRD) grant permanent, while scaling it up.
“We hope that as the minister returns to Parliament for the Budget speech, this matter will take priority once more, with clear set timelines for the implementation of relief to poor South Africans,” said Fedusa deputy general secretary Ashley Benjamin.
“We equally remain committed to the call for a universal basic income as an urgent need, as the SRD grant demonstrates.”
The Tourism Business Council of SA yesterday said it expected Godongwana to allocate more resources to infrastructure development to repair the roads and allocate money into the cleanliness of towns and cities to boost tourism attractions.