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Cape Town - A group of civil society organisations, under the banner of the Budget Expenditure Monitoring Project (BEMP) launched their own “peoples’ budget speech” calling for a more equitable distribution of the country’s wealth.
It was drafted on the basis of what Finance Minister Pravin Gordhan might have said had the BEMP written his speech, and delivered a day ahead of the actual National Budget address.
It opens by noting: “We have a duty to allocate budgets and human resources, to deliver a cheque that can be cashed in order to narrow inequality.”
Such a cheque should “provide quality education in the shortest time possible; ensure safe and clean neighbourhoods, employment and that means steadily improve certain constitutionally enshrined rights that are key to people’s ability to live”.
The speech is strongly interventionist, noting that the “only course to growing the
economy is one where government must play an active role”.
Current policies ensure that the rich remain rich while the majority of South Africa stays poor. The public sector should also be taken off the “austerity autopilot” announced in the Budget last year.
To remedy this situation this “alternative budget” proposes that the already established demands to cut wasteful expenditure by public servants and politicians be implemented; that corruption and mismanagements be vigorously dealt with to halt the loss of revenue identified last year as R26.4bn.
But the nub of the argument is the need for a progressive tax regime summed up as: “We need to tax the rich so the poor can live better lives.” It is pointed out that the poor now bear a disproportionate burden through paying an equal rate of VAT on many essential goods."
While giving “full support” to the tax review committee established last year and which is expected to report in March, the BEMP puts forward its suggestions.
They boil down to broadening the tax base, by taxing higher income earners on a progressive scale and tightening up of wasteful expenditure and corruption and increasing the fiscal deficit.
The rule of setting tax revenue at 25% of GDP should also be rejected and a level of at least 30% instituted. It is pointed out that the average ratio in the European Union is 36.5% of GDP.
The wealthy, by paying a greater — and fairer — rate of tax would also ensure greater social stability to the advantage of everyone.
Individuals with an income of over R5m and those able to save R1m a year should “come forward and begin to start paying a fair share of taxes”. At the same time regulations should be introduced to block the use of tax havens like Barbados and British Virgin Islands.
While waiting for our efforts to increase the tax revenue to bear fruit, the BEMP proposes a higher level of fiscal deficit. Last year’s deficit figure of 6% should be revised to 8%, giving and estimated R67bn a year to “fund social projects”.
But it is also pointed out that there is something like a cash pool available in both the Public Investment Corporation (R1.5 trillion) and the underspent Unemployment Insurance Fund (R11bn). Use of these funds could minimise foreign borrowing.
As the BEMP sees it, the South African economy and society is “structured between global and domestic elites doing business and living well while the rest of the population struggles to find employment, safe drinking water, good education and health care, safe public transport and food security”.
It goes on to give a comprehensive breakdown of the shortfalls and needs in sectors such as health, housing and education and calls for adequate income to be provided to poor households.
Finally, it warns that it would be fatal for government to overlook the urgency of the moment for fear of upsetting the market; that the events of Marikana, and the protests at De Doorns and in many other centres are “not an end but a beginning”.
And it has Gordhan’s wished-for speech concluding: “I stand before you to tell you that we will now rewrite this beginning, because if we do not, the whirlwinds of revolt will continue to shake the fragile foundations of our hard won democracy. They will do so until we have a fiscal policy reflected in a Budget that truly raises, allocates and spends rands and cents towards building a more just society.”
It was drafted on the basis of what Finance Minister Pravin Gordhan might have said had the BEMP written his speech, and delivered a day ahead of the actual National Budget address.
It opens by noting: “We have a duty to allocate budgets and human resources, to deliver a cheque that can be cashed in order to narrow inequality.”
Such a cheque should “provide quality education in the shortest time possible; ensure safe and clean neighbourhoods, employment and that means steadily improve certain constitutionally enshrined rights that are key to people’s ability to live”.
The speech is strongly interventionist, noting that the “only course to growing the
economy is one where government must play an active role”.
Current policies ensure that the rich remain rich while the majority of South Africa stays poor. The public sector should also be taken off the “austerity autopilot” announced in the Budget last year.
To remedy this situation this “alternative budget” proposes that the already established demands to cut wasteful expenditure by public servants and politicians be implemented; that corruption and mismanagements be vigorously dealt with to halt the loss of revenue identified last year as R26.4bn.
But the nub of the argument is the need for a progressive tax regime summed up as: “We need to tax the rich so the poor can live better lives.” It is pointed out that the poor now bear a disproportionate burden through paying an equal rate of VAT on many essential goods."
While giving “full support” to the tax review committee established last year and which is expected to report in March, the BEMP puts forward its suggestions.
They boil down to broadening the tax base, by taxing higher income earners on a progressive scale and tightening up of wasteful expenditure and corruption and increasing the fiscal deficit.
The rule of setting tax revenue at 25% of GDP should also be rejected and a level of at least 30% instituted. It is pointed out that the average ratio in the European Union is 36.5% of GDP.
The wealthy, by paying a greater — and fairer — rate of tax would also ensure greater social stability to the advantage of everyone.
Individuals with an income of over R5m and those able to save R1m a year should “come forward and begin to start paying a fair share of taxes”. At the same time regulations should be introduced to block the use of tax havens like Barbados and British Virgin Islands.
While waiting for our efforts to increase the tax revenue to bear fruit, the BEMP proposes a higher level of fiscal deficit. Last year’s deficit figure of 6% should be revised to 8%, giving and estimated R67bn a year to “fund social projects”.
But it is also pointed out that there is something like a cash pool available in both the Public Investment Corporation (R1.5 trillion) and the underspent Unemployment Insurance Fund (R11bn). Use of these funds could minimise foreign borrowing.
As the BEMP sees it, the South African economy and society is “structured between global and domestic elites doing business and living well while the rest of the population struggles to find employment, safe drinking water, good education and health care, safe public transport and food security”.
It goes on to give a comprehensive breakdown of the shortfalls and needs in sectors such as health, housing and education and calls for adequate income to be provided to poor households.
Finally, it warns that it would be fatal for government to overlook the urgency of the moment for fear of upsetting the market; that the events of Marikana, and the protests at De Doorns and in many other centres are “not an end but a beginning”.
And it has Gordhan’s wished-for speech concluding: “I stand before you to tell you that we will now rewrite this beginning, because if we do not, the whirlwinds of revolt will continue to shake the fragile foundations of our hard won democracy. They will do so until we have a fiscal policy reflected in a Budget that truly raises, allocates and spends rands and cents towards building a more just society.”
