Let’s hope ‘new’ budget takes the poor into consideration
The dust from the storm that blew up on Wednesday ahead of what would have been the first Budget Speech of President Cyril Ramaphosa’s government of national unity will no doubt have settled down by March 12, the appointed new hour when the finance minister will attempt to do what couldn’t be done on February 19.
True to the lived reality today, the speech of Minister of Finance Enoch Godongwana was out there and discussed everywhere on social and traditional media platforms despite attempts by officialdom to put a lid on it after the postponement.
Godongwana had to defer the delivery of the speech because of the vehement opposition to it, especially the part which announced the hike in value-added tax (VAT) by two percentage points to 17%.
This more than anything would have betrayed the lie that this was still a pro-poor budget that underlined the government’s commitment to the declared post-1994 goal of a better life for all.
The supposed cushion of zero-rating basic foodstuffs would, in our opinion, hardly have been enough to soften the blow on the poor and the nascent African middle class now repeatedly asked to tighten the belt.
In a matter of two months, from April, the consumer will wake up to the reality of a 12% hike in Eskom tariffs that will no doubt make it even more difficult for the average South African household to make ends meet.
These are tough economic times not too conducive for an insatiable beastly state with Oliver Twist tendencies to always ask for more while doing little to end the corruption, incompetence and inefficiency that have bankrupted the public purse.
VAT is widely considered a regressive form of taxation, mainly due to its indiscriminate nature, thus hitting the poor more than the rich who naturally are resourced enough to take such hikes in their stride. It taxes low-income earners at the same percentage for goods and services as it does the well-heeled.
On top of that, it was not too long ago that poor South Africans had to stomach such a hike when a 1% increase in the VAT rate was implemented in April 2018. Then the now-familiar promises of zero-rating of basic foodstuff were made but still the poor were left to the elements and the economy still stubbornly refused to yield the type of growth required if we were to make it work for everyone.
It is back to the proverbial drawing board for Godongwana and his functionaries. We hope they will have taken to heart the lessons of February 19 and return on March 12 with a budget that will lighten the load placed disproportionally and unfairly on the poor.
We cannot, as a country collectively burden the needy more than they are already saddled with. An increase in the VAT rate, let alone a 2% increase, will be wholly unfair.
The postponement of the budget speech, embarrassing as it might have been, affords the government to revisit its priorities by putting its money where its mouth is and serving the needs of the poor instead of asking for more milk from an emaciated dairy cow.
