DOCUMENTS

No 'radical economic transformation' in budget – EFF

Fighters will lead a process to develop laws to combat illicit financial flows and tax avoidance

EFF statement on the budget statement by Finance Minister Pravin Gordhan 

23 February 2017  

The EFF notes the budget policy statement delivered by the Finance Minster Pravin Gordhan. We welcome the broader interventions to secure the incomes of the poor and unemployed though increases in Social and Old Age grants. We also welcome relief that “will be provided in the affordable housing market through an increase in the threshold above which transfer duty is paid from R750 000 to R900 000.”

The minister’s budget statement also seeks “to support higher density housing”, as a result “subsidies for social housing have been rationalised and R600 million over the medium term is re-prioritised to the Social Housing Regulatory Authority for investment in rental housing units.” On Higher education, “a substantial additional allocation to higher education is again proposed, adding R5 billion to the R32 billion previously announced.” All these interventions will allow the poor leverage in an authorized hostile environment.

We celebrate the new conditional grant to provinces; the early childhood development grant. This is in line with EFF policies that in each and every ward in the country, there must be an early childhood development centre accessible to all children for free. “The grant is expected to increase spending in the Children sub-programme within the Welfare Services Policy Development and Implementation Support programme at an average annual rate of 99.8 per cent over the medium term.”

Also, the granting of a banking licence to PostBank must be supported and government institutions and businesses must take their accounts to PostBank to inspire confidence. In addition, PostBank must provide services to our people at an affordable rate and not be driven by profit greed.

However, we must put it on the record that there is absolutely no “radical economic transformation” about this budget policy statement. In fact, Gordhan has maintained the central ideological framework of neoliberalism: creating a working environment for profit maximisation by big corporations. This is demonstrated by the continued burden that is put on individuals for the revenue collection and growth. Both increases in Petrol levy and Sin Tax on one hand, and Personal Income Tax on the other must be seen as placing the burden of funding the state on individuals as opposed to corporations.

There is ample evidence that many multinational corporations engage in illicit financial flows, tax avoidance and price collusion. Yet, there is constant reduction of Company Income Tax (CIT) into the national revenue fund while Personal Income Tax (PIT) trend is of drastic increase over the past years. PIT increased from 34% in 2012/13 to estimated 38% in 2016/17, an increase of well over 4% over a period of 5 years. However, CIT continues to decrease, from 20% in 2012/2013 to an estimated 17% in 2016/17, a decrease of well over 3%.

This demonstrates the pro-capitalist budget planning which also indirectly promotes corporate greed. The resolutions of economic problems are placed on the individual as opposed to big profit making corporations that make money out of petrol, alcohol, tobacco and sugar.

Although the Minister says there will be measurers to combat tax avoidance, it is impossible without legislation. The EFF will therefore lead a process through private members bill to develop laws to combat illicit financial flows and tax avoidance. 

Finally, we want to categorically state that there will never be radical economic transformation without nationalisation of banks and land expropriation without compensation. If the minister wants the country to adopt Charter for Economic Rights, it must start with land as a basic human and economic right.

Issued by Mbuyiseni Quintin Ndlozi, National Spokesperson, EFF, 23 February 2017