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THE 2013 budget was astonishing. It was alarming in the manner in which it glided over the health budget, given that there are great problems facing the country’s public health sector.
Finance Minister Pravin Gordhan mentioned healthcare as part of the social wage and the National Health Insurance pilot project - but failed to mention the most critical finer details of the state’s plans in this regard.
The budget was shocking in the way it failed to highlight the crucial needs of the vast majority of South Africans.
Experts said the budget was based on the idea that there should first be growth before there can be redistribution.
Be that as it may, this was also a clever packet of calculations which had bigger rational consistencies than the mishmash of measures dished up under the apartheid regime before the first all-race elections in 1994.
After Gordhan made his 2013 Budget presentation in parliament this week, the politics of the budget were instantly obvious: put more emphasis on the National Development Plan, it will bring a degree of certainty to the business sector with regard to future economic environment, fostering investor confidence in the process.
Bring back the youth subsidy, which the DA has been calling for, in a watered down form and it will appease those who are on the other side of the divide for the good of the country. About R500m will go to the youth subsidy, which was opposed by Cosatu.
This was how finance ministers during Nelson Mandela and Thabo Mbeki’s presidencies used to do it.
But that remains risky. This is in view of the fact that Mbeki presided over a prosperous economy, actual earnings were growing promptly, house prices were shooting the lights out and treasury was bursting at the seams with cash.
Not much of this is happening currently. Additionally, the country’s budget deficit is a little over 6% and the government is battling to reduce it to less than 3%.
So you cannot apply strategies that were used during the times of prosperity as if the country’s economy is currently doing well, lest you burn your fingers.
Lastly, the South African electorate, who are undergoing an umpteenth year of sinking salaries and joblessness, may not be as well inclined towards the government as the state would expect.
Their only good recollection of the 2013 Budget is likely to be the generosity shown to them through R7bn in personal income tax relief, and adjustments to the medical tax credit and other monetary thresholds amounting to about R350m.
Tabling his 2013 Budget in the National Assembly, Gordhan said that over the past decade the tax base has been steadily broadened, both through policy reforms and improved revenue administration.
This has made substantial tax relief possible, contributing both to household disposable income and a lower cost of doing business.
According to Sapa, other tax proposals for 2013 include reforms to the tax treatment of contributions to retirement savings, an employment incentive through the tax system for first-time job seekers, and further tax relief for small businesses, including an increase in the monetary tax thresholds applicable for small business corporations.
Gordhan said a review this year would assess the tax policy framework and its role in supporting the objectives of inclusive growth, employment, development and fiscal sustainability, among other things.
But these are just proposals and nothing else. They might not even materialise.
For now, those who are eligible to vote will have to sit and watch the government’s fat cats splurge on big German cars while they continue to lose jobs and battle to put food on the table for their families.
- Fin24
*Mzwandile Jacks is a freelance journalist. Opinions expressed are his own.
Finance Minister Pravin Gordhan mentioned healthcare as part of the social wage and the National Health Insurance pilot project - but failed to mention the most critical finer details of the state’s plans in this regard.
The budget was shocking in the way it failed to highlight the crucial needs of the vast majority of South Africans.
Experts said the budget was based on the idea that there should first be growth before there can be redistribution.
Be that as it may, this was also a clever packet of calculations which had bigger rational consistencies than the mishmash of measures dished up under the apartheid regime before the first all-race elections in 1994.
After Gordhan made his 2013 Budget presentation in parliament this week, the politics of the budget were instantly obvious: put more emphasis on the National Development Plan, it will bring a degree of certainty to the business sector with regard to future economic environment, fostering investor confidence in the process.
Bring back the youth subsidy, which the DA has been calling for, in a watered down form and it will appease those who are on the other side of the divide for the good of the country. About R500m will go to the youth subsidy, which was opposed by Cosatu.
This was how finance ministers during Nelson Mandela and Thabo Mbeki’s presidencies used to do it.
But that remains risky. This is in view of the fact that Mbeki presided over a prosperous economy, actual earnings were growing promptly, house prices were shooting the lights out and treasury was bursting at the seams with cash.
Not much of this is happening currently. Additionally, the country’s budget deficit is a little over 6% and the government is battling to reduce it to less than 3%.
So you cannot apply strategies that were used during the times of prosperity as if the country’s economy is currently doing well, lest you burn your fingers.
Lastly, the South African electorate, who are undergoing an umpteenth year of sinking salaries and joblessness, may not be as well inclined towards the government as the state would expect.
Their only good recollection of the 2013 Budget is likely to be the generosity shown to them through R7bn in personal income tax relief, and adjustments to the medical tax credit and other monetary thresholds amounting to about R350m.
Tabling his 2013 Budget in the National Assembly, Gordhan said that over the past decade the tax base has been steadily broadened, both through policy reforms and improved revenue administration.
This has made substantial tax relief possible, contributing both to household disposable income and a lower cost of doing business.
According to Sapa, other tax proposals for 2013 include reforms to the tax treatment of contributions to retirement savings, an employment incentive through the tax system for first-time job seekers, and further tax relief for small businesses, including an increase in the monetary tax thresholds applicable for small business corporations.
Gordhan said a review this year would assess the tax policy framework and its role in supporting the objectives of inclusive growth, employment, development and fiscal sustainability, among other things.
But these are just proposals and nothing else. They might not even materialise.
For now, those who are eligible to vote will have to sit and watch the government’s fat cats splurge on big German cars while they continue to lose jobs and battle to put food on the table for their families.
- Fin24
*Mzwandile Jacks is a freelance journalist. Opinions expressed are his own.
