Why hike VAT but let SAA drain billions, asks FMF

2018-02-28 16:50
AFP

Cape Town - It is worth noting that the estimated R23bn in tax revenue the 1% increase in VAT to 15% will raise for the government, is similar to the accumulated losses of R24.3bn made by South African Airways (SAA) over the five years from 2012 to 2018, according to the Free Market Foundation (FMF).

"Tell that to the poor as they fork out more for essentials while an SAA plane flies overhead carrying rich businessmen and politicians," the FMF said in a statement issued on Tuesday.

This was in reaction to the news that SAA has failed yet again to finalise its financial statements for 2016/17 and that no annual general meeting (AGM) has been scheduled.

Towards the end of November last year, an SAA delegation assured the parliamentary standing committee on finance that lenders agreed to reschedule loans, enabling the airline to pass the “going concern” issue, which had been the cause of a delay in finalising results. The airline indicated that the AGM would likely take place in January 2018.

Former finance minister Malusi Gigaba, however, had to ask Parliament to approve a further delay in submitting the 2016/17 financial statements of SAA. He cited “technical difficulties” and obtained a new deadline of April 30.

The FMF wants to know what these "technical difficulties" are, especially in the light of the 1% increase in VAT to help government fill the anticipated revenue gap. The FMF protests government resorting to the VAT hike for revenue, while SAA incurs losses of billions of rand.

"SAA is subject to the requirements of the Companies Act as with any other company. If there is a reason why SAA may default on a loan and/or pay suppliers, then the directors are legally obliged to inform creditors or place SAA into business rescue," stated the FMF.

"Government is, in effect, the custodian of the people’s money. In other words the true shareholders of SAA are the people of South Africa. We demand answers on where our money is going and why the Auditor General is unable to sign off SAA’s financial accounts twelve months after the books closed. What is there to hide?" demanded the FMF.

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