We need a Spending Review to give hope to the ‘lost generation’, including millions of young people who do not have jobs in SA

22 February 2017

The Minister of Finance, Pravin Gordhan, had very little political space and even less fiscal space in which to manoeuvre when he tabled the main budget today in Parliament.

The fact is that, because of a failure to implement structural reforms to boost economic growth, economic growth has stagnated, with the projected economic growth rate being revised down from 1.7% to 1.3% for 2017.

That is why the minister was forced to announce tax increases and will be reaching into your pockets to raise an additional R28 billion in revenue in 2017/18, including: Personal Income Tax  (R16.5 billion); Dividends Tax (R6.8 billion); General Fuel Levy (R3.2 billion); and “Sin Taxes” (R1.9 billion).

And that is why whether you are rich, and paying more direct tax, or whether you are poor, and paying more indirect tax, you will be paying more tax in 2017/18.

What we should be doing is cutting spending rather than raising taxes, including cutting spending on, for example, the R14.3 billion that will be wasted on bloated executives and legislatures in South Africa.

There are alternatives to tax increases including boosting economic growth, selling assets, cutting spending and eliminating waste.

That is why we have proposed implementing a Comprehensive Spending Review which would require National Treasury, working together with national departments, provinces, municipalities and state-owned entities, to review the composition of spending, the efficiency of spending, and future spending priorities, with a view to reprioritizing expenditure between 2017/18 and 2019/20.

The need for a Comprehensive Spending Review is underlined by the fact that, despite the tax increases, there will still be spending cuts, which will compromise service delivery, including R2 billion reduction in conditional grants, including the “human settlements development grant”, “health facility revitalization grant”, and the “educational infrastructure grant”, in 2017/18.

We have to reprioritize expenditure to fund programmes to provide opportunities for the “lost generation”, which includes millions of young people who do not have jobs, or have given up looking for jobs, in South Africa.

Issued by David Maynier, DA Shadow Minister of Finance, 22 February 2017