Budget Speech: Set South Africa free! 

16 February 2024

The South African government cannot get rich through tax and no more hard-earned money can be taken from overtaxed South African citizens. 

Solidarity hopes this truth will dawn on the Minister of Finance before he delivers this year’s Budget Speech so that self-created crises no longer rest on the shoulders of ordinary people in the country. 

Theuns du Buisson, economic researcher at the Solidarity Research Institute (SRI), says the state does not have a problem with income, but rather a problem with its expenses. 

“Currently about a quarter of all money in circulation in South Africa is spent on taxes. It simply cannot continue like this. Minister Godongwana must realise that tax cannot make a country rich. Growth is needed and here with us it is urgently needed,” says Du Buisson. 

According to Du Buisson, one driver for growth will be to loosen the stranglehold of high taxes on the economy. 

“For this reason, the personal income tax bracket must be adjusted by more than inflation this year. Citizens, including our members,  are under great financial stress. They certainly cannot afford to have their increase taxed more heavily than is already the case.”

Solidarity further hopes that common sense and good judgment will prevail so that the minister can announce plans that will lead to better results for the money spent. 

“How is it, for example, that South Africa spends significantly more on education than most other countries, but our outcomes are simply pathetic? The same can be said of health care, policing and all sorts of other departments. The inputs and outcomes do not add up. 

“Every year the Minister talks about how excessive spending is going to be fixed, yet we do not see anything happening. The state’s salary account is the best example of that. The account itself is not necessarily as big a problem as the fact that the return, in terms of productive outcomes, is simply not there.

“South Africa has become a country of projects without plans. How does a government spend almost R400 billion on social grants in a year, without any plan to break people’s dependence on grants and inspire them to work?” says Du Buisson. 

According to Solidarity, these questions must be answered right now and real action is needed to address the country’s problems. Therefore, Solidarity proposes a special priority fund of approximately R5 billion that can be allocated annually to not only address one problem but to actively solve it. 

“If the priority fund is simply allocated to the relevant department, it forms part of the general budget of that department and creates an expectation that the money will be available again the next year. It is therefore important that it is handled separately. 

“Our proposal is to first restore law and order by ensuring that the police’s equipment and vehicles are properly replenished. Next year the transport crises may be the priority and the following year infrastructure at schools may receive attention. How do we expect learners to work in the modern age if our schools are still plodding along in a bygone era without computers or internet access?” Du Buisson asked. 

He further hopes that the Minister will also announce urgent action that is conducive to attracting investment to South Africa. Du Buisson says it is becoming clear that even local investors increasingly prefer to take their money abroad. 

“The National Development Plan sets targets for economic growth, for example, 30% of the Gross Domestic Product (GDP) must be fixed capital formation. However, we do not see anything in the government’s policy that will fuel this growth. 

“We therefore want to propose that all investments in infrastructure, buildings or machinery should be immediately deductible in the year of capital outlay. The local steel industry urgently needs a revival in new construction projects. 

“For employees to thrive, their employers must also thrive. The Treasury must take steps to establish a more business-friendly policy. Lowering corporate income tax in 2023 was a step in the right direction but it was most certainly not enough.”

Du Buisson believes the state’s lack of planning is reflected in state debt that worsens every year. According to him, there is still no indication of how the state intends to address the budget deficit. 

Lastly, Solidarity believes that regulations should be relaxed to allow, and even encourage the private sector to solve the problems at state-owned enterprises. 

Du Buisson says it is unacceptable that the taxpayer shells out billions in bailouts annually without seeing any solutions. 

“Privatise some of our ports and privatise our railways. Allow the private sector to build new ones. The country is losing billions of rands to stock that accumulates and cannot be exported. There are solutions available, but the Minister must comply. 

“There is no reason for South Africa to be impoverished. With the right guidance and enough freedom, South Africa can be a progressive paradise in merely a decade. It is only the government that limits our progress and prevents the country from reaching its potential,” says Du Buisson.

Issued by Theuns du Buisson, Economic Research: SRI, 16 February 2024