Budget: No joy for missing middle – SADTU

Union says increase in VAT poses a great risk on buying power of poor, worsening poverty and perpetuating inequality

SADTU statement on the Budget Speech

22 February 2018

The budget speech brings no joy to the “missing middle”

The South African Democratic Teachers’ Union (SADTU) believes the 2018 budget delivered by Finance Minister Malusi Gigaba will increase the inequalities between the rich and poor even though it still continues to prioritize education, health and social services.

The increase in VAT poses a great risk on the buying power of poor and lower-income households, worsening poverty and perpetuating inequality. Even though basic foods will remain zero-rated, we do not live on food alone.  The increase in the fuel levy will adversely affect the working class, as it will mean an increase in public transport fares which will affect the same zero rated items.

Considering that the minority in the country have large amounts of wealth which was accumulated under apartheid and passed between generations while black earners have less assets to begin with and must support a higher number of dependents, therefore failure to increase wealth tax considerably is indefensible.

We are of the view that the alternatives to hiking VAT to close the revenue gap could be resolved by fixing the administrative capacity of the SA Revenue Service (SARS), including its ability to tackle tax avoidance and evasion by corporates and the wealthy because billions are taken out of the country illegally every year.

The provision of fee free higher education to students with joint family income below R350 000 per year is a positive move but is still not accommodating thousands of children of the “missing middle” workers like teachers, nurses, police officers. Their parents are regarded as too rich to receive free education and yet are too poor to afford to pay tertiary institution fees for their children.

Our position has always been that corporate South Africa must play a bigger role in contributing towards higher education access. We are still calling for an education corporate tax to avail resources that will deal decisively with higher education access for the poor and the working class

The increase in medical aid levy will deal a further blow to the “missing middle” as they subscribe to the Government Employee Medical Aid Scheme (GEMS) which is currently not cheap.

As SADTU we are not happy with the Minister’s assertion that to support higher levels of capital investment and maintenance, the state needs to contain the public-service wage bill. We are sick and tired of the narrative that seeks to create an impression that the public service wage bill is draining the state coffers when year after year the Auditor General is always pointing out wasteful and unauthorized expenditure in government departments and we see no decisive action against this.

We welcome the increased grant allocation to the school infrastructure backlogs to replace inappropriate and unsafe schools. We appreciate that 325 schools will be provided with water, while 286 schools will get sanitation. Poor infrastructure is a hazard and a barrier to learning as it prohibits many learners from accessing quality education.

Equally, we welcome the R2,7 billion national school nutrition programme grant to provide meals to 19 800 schools for about 9 million learners. The provision of school nutrition has had a positive impact on learner retention and improved pass rates. However, we would like to see the allocation of the school nutrition programme being run directly by schools and School Governing Bodies (SGBs) and not tenderpreneurs

Issued by Nomusa Cembi, Media Officer, SADTU, 22 February 2018