PARLIAMENT - The Parliamentary Budget Office was taken to task by MPs on Tuesday for failing to advise the legislature on an appropriate response to the unpopular decision to hike value added tax to 15 percent earlier this year and to take a position on mounting national debt.
Democratic Alliance finance spokesman David Maynier said the PBO had not heeded a request to brief parliament's standing and select committees on finance on whether debt levels and debt service costs were reasonable.
He said it was part of its duty because the committee had the responsibility to provide oversight on the issue in terms of section 8(5)(b) of the Money Bills Amendment Procedure and Related Matters Act. Maynier went on to infer that the PBO had not dealt with the request because it was beholden to the ruling party.
This drew protest from ANC MPs but standing committee chairman Yunus Carrim also criticised the PBO for failing to advise MPs on the finance ministry's unpopular decision earlier this year to hike value added tax to 15 percent.
"The committee has reservations about the VAT increase," Carrim said, adding that MPs would have to vote on the decision announced in the February budget to increase VAT by one percent.
Last week, Finance Minister Tito Mboweni announced that National Treasury has agreed to add three more items to the list of zero-rated products in a bid to help the poor but MPs and activists consider these concessions inadequate to make a meaningful difference.
Carrim gave the PBO 48 hours to revert to the committee with advice on the VAT hike and whether adding to the list of VAT exempted products was sufficient or the state should rather give more direct support to poor households.
"We have been pleading with you for months. You will give us an explanation of half a page within 48 hours, and if you cannot, tell us why," he said.
Mboweni announced in his medium-term budget policy statement last week that white bread flour, cake flower and sanitary pads would be added to the basket of zero-rated items, and not all MPs are convinced that this is an adequate concession.
"We don't understand why he is helping the rich at the same time as trying to help the poor," said the DA's Alf Lees.
The VAT increase took effect in April but MPs will only vote on it in coming weeks when they consider the Rates and Monetary Amounts and Amendment of Revenue Laws Bill. Lawmakers can propose amendments to the measure, though unlike income tax hikes, the VAT increase is as a direct tax impossible to reverse.
The minister has said debt as a ratio of GDP would stabilise at 59.6 percent in 2023/24 and cautioned that should it reach the 60 percent mark, South Africa risked having its finances placed under the management of the International Monetary Fund.