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Finance Minister warns of more taxes if Basic Income Grant is introduced

Finance Minister Enoch Godongwana warned that South Africans would have to pay more taxes if a Basic Income Grant (BIG) was introduced. Picture: Phando Jikelo/African News Agency (ANA)

Finance Minister Enoch Godongwana warned that South Africans would have to pay more taxes if a Basic Income Grant (BIG) was introduced. Picture: Phando Jikelo/African News Agency (ANA)

Published Feb 25, 2022

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Cape Town - Finance Minister Enoch Godongwana warned that South Africans should be prepared to pay more taxes should a decision be made to introduce the much-talked-about Basic Income Grant (BIG).

Godongwana said the National Treasury had not formed a view at all in terms of the grant.

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He made the statement when he briefed the joint meeting of parliamentary committees on finance and appropriation on Thursday.

This after ANC MP Dipuo Peters asked whether the ministry and the National Treasury were actually doing an investigation on the suggestions made to tax the rich to fund BIG.

Her colleague Kenny Morolong asked about Godongwana’s long-term view if the government could not finance the proposed grant.

Godongwana said there were a lot of grants in the system.

“We simply pile a grant over one another. Our view before talking about any grant, let us review the grant system as a whole and then think what would be appropriate in our conditions,” he said.

“If such a review leads to an increase higher than our current fund, therefore South Africans must be prepared to pay taxes,” he said.

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Godongwana also said the notion that certain groups of people would be taxed to fund BIG, while others were not taxed, would not work.

“It does not work that way. We must make this decision and know that if it is to be a decision that will bite on us because we will have to pay taxes to support BIG,” he said.

However, he told MPs that the review of the grants the National Treasury was busy with would hopefully be finalised later this year.

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“We hope by the time we reach the Medium-term Budget Policy Statement (MTBPS) we would have canvassed a view in Cabinet, which we can state in the Budget Policy Statement,” Godongwana said.

Meanwhile, the minister explained the delay in introducing the Public Procurement Bill to Parliament, which he announced in last year’s MTBPS.

He told the MPs that they were preparing to put before Parliament the Public Procurement Bill which, he said, was all-embracing and would replace the entire existing procurement processes.

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The minister said two developments had taken place and would impact their plans.

“The first is the report of the Zondo Commission, which deals extensively with the limits of the procurement system we have. Last week, we lost a court case in the Constitutional Court,” he said.

“In light of that, we want to take a look at the bill after studying those two developments,” he added.

However, Godongwana said the National Treasury would in the meantime issue a new instruction which would give flexibility and power to accounting authorities.

“We intend to issue the instruction in the next 14 days. It enhances the reporting requirements to the National Treasury, provincial treasuries and the Auditor-General,” he said.

Finance portfolio committee chairperson Joe Maswanganyi said the department should deal with the legal challenges to the bill.

“We acknowledge the challenges as a result of Zondo and court challenges last week but we can’t afford that the right-wingers will be on the offensive and push back BEE.

“No minister, I for one come from the ANC which has been elected on the ticket of empowering the previously disadvantaged.

“So work on all the issues you have raised, but the sooner this bill comes to Parliament, the better,” Maswanganyi said.

EFF chief whip Floyd Shivambu asked whether it was not time for the National Treasury to use the legislation as an instrument for localisation and local industrial local production of goods and services to boost the economy in South Africa.

“We have to amend the Public Finance Management Act and the Municipal Finance Management Act to emphasise the centrality of local procurement but also include aspects of women participation in procurement,” Shivambu said.

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Political Bureau

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