The DA has emphasised that the government must cut spending to make up for the R58-million that the now-suspended 2% hike in value-added tax (VAT) was supposed to generate.
Speaking to reporters in Parliament on Tuesday, DA finance spokesperson Mark Burke outlined the party’s plans to restructure the budget.
The DA strongly opposed the VAT hike, citing the fragile state of South Africa’s economy, which led to the last-minute postponement of the annual budget speech, which was originally scheduled for Wednesday last week.
Call for substitute measures
The budget will now be tabled on March 12 by Finance Minister Enoch Godongwana.
Burke emphasised that the DA was opposed to the VAT increase and called for the development of substitute measures to guarantee that the budget could function without the hike in VAT.
“South Africa’s tax space is too small to carry any additional increases without choking the private sector, investment, and further damaging the economy,” said Burke.
“Tax increases will chase away investment, shrink our tax space, and ultimately cause damage to the economy.
“Government must find R60-billion in savings from wasteful spending instead of burdening taxpayers further.”
Hiring freeze suggested
He suggested a 12-month hiring freeze for non-essential government jobs, a 50% reduction in the government’s advertising budget, and a 33% reduction in travel and catering expenses across all departments.
This would be effective in restructuring the country’s budget to focus on more essential sectors and growing the economy, he explained.
“We need to increase revenue without raising taxes. Instead of suffocating taxpayers, South Africa should focus on improving tax compliance and unlocking state assets.
“We can increase tax compliance from 63% to 67%, which will yield R60-billion a year. We need to sell underutilised state-owned land and properties, and if we do this, we estimate that we could raise about R10-billion a year.”
Burke emphasised that what he presented was what the party believed in and suggested to avoid the VAT increase, but he could not confirm or deny whether the proposal was also shared during Monday’s special cabinet meeting.
