EFF STATEMENT ON THE NATIONAL BUDGET FOR 2016/2017
25 February 2016
The Economic Freedom Fighters welcomes the budget by the Minister of Finance, Pravin Gordhan, and his effort in tabling an balanced budget under current difficult economic circumstances. We further welcome the increased investment and allocation of resources to education, given the immediate demands of students for free quality education.
The EFF reiterates its call for provision of free quality education to all and a move away from cosmetic interventions of zero percent fee increases when the majority of students cannot even afford current registration and tuition fees.
We are also pleased with the decision by the Minister not to succumb to pressure by those who were vociferous in advocating for increases in Value-Added Tax and Income Tax. We welcome increases in transfer duties on properties valued over R10 million from 11% to 13% to ensure that wealthy individuals make increased contribution to the revenue pool of the state.
Increases in social grants, though not sufficient, are necessary to assist the majority of South Africans who live in degrading condition of poverty to cope under this debilitating economic period. Allocation of more resources towards healthcare is a step in the right direction. The EFF insists on a significantly improved healthcare system that provide free and quality healthcare to the people of South Africa who are held hostage to expensive medical aid schemes and private healthcare.
We call on the government to make it compulsory for all public officials, especially members of the mass choir that is Zuma’s cabinet and their families to use public healthcare. Public healthcare can only improve when those tasked with the burden of policy implementation are subjected to the same poor quality as the rest of South Africans.
We wish to commend the Minister for boldly pronouncing commitment to tackling the phenomenon of illicit financial flows that is draining the economy and the national fiscus of billions of Rands each year. The Global Financial Integrity (GFI) reported that in 2009 alone, South Africa lost more R450 billion to illicit financial flows. The GFI report further revealed that between 2004 and 2013, South Africa lost more R3.2 trillion to illicit financial flows and being ranked 7th in the world as the source of illicit financial flows, after China, Russia, Mexico, India, Malaysia and Brazil.
The Minister indicated that his tax measures would raise R48 billion in 3 years. We bring it to the attention of the Minister that South Africa loses an estimated average of R325 billion annually to illicit financial flows. Drastic measures to curb illicit financial flows will significantly increase the tax revenue and further measures must be taken to recover these trillions of Rands already stolen by multinational companies who disguise their criminal activities under the cloak of ‘foreign direct investment’. According to the United Nations Conference on Trade and Investment (UNCTAD), foreign direct investment inflows to South African in 2013 were only $10.3 billion, i.e. about R160 billion compared to the R325 billion illicit financial flows.
The EFF further wish to call on the Minister to ramp up his effort in cutting wasteful expenditure. He has committed himself to cutting spending by R25 billion over the next years. We are saying that this is not enough. The Auditor General consistently reports wasteful expenditure of about that R25 billion annually. The Minister should set himself a target of cutting wasteful expenditure by at least R100 billion over the next three years and his boss Jacob Zuma must further commit to cut down the size of his bloated and ineffective cabinet which is draining scarce financial resources.
While it is important to to present a budget that is geared towards improving confidence in the economy, we caution against pandering to the whims of credit rating agencies whose purpose of existence is to dictate our economic direction while disregarding the radical economic transformation imperatives.
No country wish to have a credit rating downgrade, especially a junk rating status. However, these foreign credit rating agencies are not committed to the same priorities that the people of South Africa who exist on the margins of the economy are impatient for. These same credit rating agencies that the Minster is at pain to please were behind irregular positive credit ratings of junk bonds in the US, which consequently triggered the global financial crisis in 2008. The time has come for BRICS to establish its own credit rating agency that is alive to developmental imperatives of emerging economies.
A radical shift in the macroeconomic framework demands of policy makers to take bold and equally radical decisions geared towards a complete overhaul of the currently skewed economic arrangement. A further commitment to a radical overhaul of the tax system to clamp down on aggressive tax avoidance and illicit financial flows is necessary for significantly increased revenue generation and to catapult the nation to a radical and sustained economic trajectory.
Statement issued by the Economic Freedom Fighters, 25 February 2016
