Letter: It’s time to make the hard decisions to get SA back on track, Mr Minister

Finance Minister Enoch Godongwana. Picture: Leon Lestrade/Independent Newspapers

Finance Minister Enoch Godongwana. Picture: Leon Lestrade/Independent Newspapers

Published Feb 20, 2024


By Paul Gering Partner, PKF SA

Following a system started by Trevor Manuel when he was minister of finance, the minister of finance, Mr Enoch Godongwana, has asked for Budget tips before the Budget speech on Wednesday.

As a leading tax organisation in SA, we have decided to take the minister up on his offer.

In hospitality, the term “Tips” is derived from the expression "To ensure prompt service," and Mr Minister, all South Africans want is service delivery.

The state should provide its citizens with secure borders, quality education, health-care facilities, electricity, water and infrastructure including roads, rail systems and working ports. The unfortunate reality is that none of the fundamental service requirements are being adequately met by the state. Where they are limping on, they are costing taxpayers far more than the value they generate in the economy.

Unfortunately, the recent State of the Nation address was short on specifics, including on how the contentious National Health Insurance would be administered and funded. For instance, any move to a national, centralised and expensive scheme like this would surely impact medical tax credits. We would have, therefore, expected some initial announcements on how the transition would work.

We understand it is an election year, but the voting public and the business sector is after action, Mr Minister. This must be a Budget about doing and not talking – we need to see how the money will be spent, not just how much and how the government intends to improve implementation, notably on service delivery.

Recent power cuts are having a significant impact on many of the businesses and business sentiment is down. Issues like lack of quality water in many areas exacerbates this problem.

There is little doubt that this year’s election will be the biggest test of our democracy yet – it will be important to pass this test. The groundwork will be laid in Wednesday’s Budget on how many social ills plaguing the country can be addressed by the incoming administration. It will therefore be critical areas like improving the performance of state-owned entities features strongly.

The minister must ensure a better process to protect the collected tax revenues. The president has admitted that billions were lost due to state capture, which has not ended.

The unfortunate reality is that the many senior ANC leaders named in the state capture report remain in positions of power and authority. Nothing seems to have been done to stop the loss of tax revenue.

It’s all about energy

Broader solutions must be found at the coalface. For instance, every municipality could be instructed by the electricity minister immediately and without delay to introduce the necessary by-law or ordinance that every new dwelling built from this day forth must have a solar geyser. Every house costing more than R5 million should include a least six solar panels, even if there is no requirement for a battery storage unit.

The tax incentive for rooftop solar should be extended for at least one further tax year to encourage the home solar systems and create significant relief for the grid in the day to allow commerce and industry not to be so impacted by load shedding.

Finding Skills

There are many laws but not enough skilled South African Revenue Service (Sars) auditors to enforce compliance. Doctors must do community service – they are well paid but must work in public hospitals to give back to the community for a year. In the old regime, many chartered accountants worked at Sars for 2 years as part of their national service. We would look to introduce this for a year post articles in Sars, in other financial departments of municipalities. The National Treasury must pick up skilled staff, as its staff shortages are hobbling the rate at which proposed legislative changes can be passed and effected.

Sars also needs to focus more on outstanding returns – know your taxpayer – if there is VAT or PAYE, why is there no corporate tax return – If there is money in the bank, why is there no tax return?


We are proud of the 2023 matric results but we fail to look at the challenge in light of a youth unemployment crisis. More drastic steps are needed to right this ship. We have a solid private school system and a solid Model C system. It is not too late for the Department of Education to ask for help – like using the Model C schools and the private schools to run additional classes after hours to reduce class numbers, get more children into schools, drive up quality and ensure those needing additional attentions get it at the highest level.


We have made some progress, but change is too slow and cumbersome. For instance, the Master Portal used for online submissions of requisite reports has serious delays and issues with uploading information.

Inflation Targeting

We have an inflation target of 3 to 6%. To maintain these levels, the Reserve Bank needs to increase interest rates. As a developing country, we need to reconsider the inflation band. This was noted previously by Nobel prize winner Joseph Stiglitz who commented on the need to abandon inflation targeting in May 2008 when he noted:

“The struggle to meet rising food and energy prices is hard enough. The weaker economy and higher unemployment that inflation targeting brings won't have much effect on inflation – it will only make the task of surviving in these conditions more difficult.”

We probably need an inflation band of 4 to 8% while we develop, as long as there are sufficient controls on wasteful and unauthorised expenditure, as elaborated on below.

Wasteful and unauthorised expenditure

The words of the archbishop emeritus Archbishop Tutu are appropriate when considering what the government should do about wasteful expenditure:

“I must say I would need a lot of convincing to show that an expense of R100 million for a youth rally of questionable taste and intellectual worth was money well spent in the face of so much poverty, unemployment and homelessness. What is happening in North Africa is to remind governments everywhere that people are not fools. One day, they will call rulers to account.”

We need to act decisively, as simple audits have not stopped the wasting of public funds, and unless this is stopped, the country will be bankrupted.

Amnesty or some way for the balance of the undisclosed to come forward

We had an amnesty at the start of democracy but not everyone was convinced. We had a more cumbersome and expensive voluntary disclosure; not everyone was convinced. The problem is that finding the crumbs to lead to the correct destination is not easy. The process will be long and expensive. There must be a way to show the honest taxpayers that it is in their interest to allow one last coming out-the-shadow moment rather than have a VAT increase, for instance, and get the capital taxed at a lower rate, with no interest and no penalties, to ensure that the tax base grows. We must stem the tide of high net-worth individuals leaving our shores due to fears of instability and lack of faith in service delivery.

Mr Minister, you have the power to do much more than raise taxes – you have the power to control the direction of the funds to projects that count – you have the power to fund the ministries that use the funds to the best advantage and to defund those ministries where the mandate is a luxury, or the mandate has been abused. And if you do not have the power to do so alone, you have the power to do so with others.

Mr Minister, we hope you have the strength to put the brakes on spending where it is unnecessary, to stop wasteful and unauthorised expenditure and are gentle on us in the interim by finding another golden egg as your predecessors did with past amnesties.