Cape Town - Finance Minister Malusi Gigaba on Wednesday delivers his maiden Budget speech, in which he has to strike a balance between the country’s precarious financial situation, slow economic growth and pressing issues such as free higher education.
Expectations were high on Tuesday that the speech would be aligned to President Cyril Ramaphosa’s priorities as outlined in the State of the Nation Address and signal a transition from former president Jacob Zuma’s administration.
On Tuesday, ANC tripartite alliance partners Cosatu and the SACP - who were central to Zuma’s forced resignation - warned the government against increasing value-added tax (VAT) as part of its efforts to boost the ficus's tax revenue.
Gigaba is also expected to make pronouncements on the vexing nuclear issue; austerity measures to cut fruitless expenditure in the government (including the size of the executive); and plans for state-owned enterprises, which have been brought to their knees by looting.
Gigaba’s future at the National Treasury was hanging in the balance as the push for Ramaphosa to reshuffle his cabinet gained momentum.
In October’s Medium-Term Budget Policy Statement, Gigaba announced a R50.8billion shortfall.
Zuma had called on the government to look at other avenues of closing the gap in revenue, and speculation has been rife that VAT could be the last resort.
ANC alliance partners the SACP and Cosatu argued that mismanagement and looting in the government were responsible for the shortfall and that increasing VAT would be punishing the poor, while absolving the government.
SACP spokesperson Alex Mashilo said the rich should instead foot the bill for the shortfall in revenue.
“We definitely do not expect that VAT will be increased, because it will obviously hit the working class and the poor hard, and they are already battling to make ends meet. Tax must be increased at the top where wealth is concentrated and this must be done through a wealth tax,” he proposed.
Mashilo said the SACP expected Gigaba to provide full clarity on the funding of fee-free higher education as announced by Ramaphosa on Friday.
“We fully support the expansion of fee-free higher education, but Zuma left everyone in a state of confusion because he did not give clarity, but we are expecting the government to provide clarity now,” Mashilo said.
Cosatu spokesperson Sizwe Pamla echoed Mashilo’s sentiments, saying the government would be “throwing the working class under the bus” if it increased VAT and income tax.
Pamla warned that the government must not think it can justify VAT and income tax hikes for the working and middle classes, adding that Cosatu would also not support any moves to cut social spending.
“If the government is serious about balancing the Budget, let them cut the 78-member cabinet to 30; let them reduce the size of provincial cabinets; let them announce cuts in politicians’ perks; let them announce the halting of providing bodyguards to all mayors and municipal Speakers,” Pamla said.
The DA’s deputy spokesperson on finance, Alf Lees, said the party wanted the government to put austerity measures in place as part of encouraging economic growth and growing the revenue surplus.
“They must reduce expenditure and put cost-containment measures in place,” Lees said.
Universities SA’s chief executive Professor Ahmed Bawa said they hoped that Gigaba would give clarity on the fee-free education policy.
“We would like to understand the long-term sustainability of the new funding model and for all of us to be fully convinced that it will be sustainable in the long run.”
Bawa said they also needed clarity on the increase in state subsidies to universities from 0.68% to 1% over the next five years.
EFF Student Command spokesperson Mangaliso Sambo said they were expecting Gigaba to outline plans to scrap historical debt, among other things.
“We are looking where the money will be allocated and the full implementation of free higher education; and not only to first-years, but also those who have historical debt and cannot register, get accommodation or get their past results,” he said.
Equal Education’s Philile Ntombela-Masson said the lion’s share of public funding must prioritise those who were most in need.