Gordhan urged to slash red tape

Durban – Cancel the 2022 Commonwealth Games, put a stop to the R1.3 trillion nuclear plan, increase social grants and lower interest rates to avoid junking South Africa’s economy.

Political and economics analyst Patrick Bond has called on South Africa’s Finance Minister, Pravin Gordhan, in his annual Budget speech today to stop making big business rich, to increase social grants to above inflation for the 16.5 million who depend on them for survival and to aggressively encourage local production of goods while promoting renewable energy to power the country.

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In contrast to most economists who are predicting that the minister will increase personal income tax by at least 1%, keep corporate tax unchanged, and possibly increase value added tax, Bond said massive white elephant projects such as the 2022 Commonwealth Games, the R300 billion coal export rail line to Richards Bay and the R1.6 trillion nuclear plant must be stopped.

“The first task for National Treasury and the South African Reserve Bank is to tighten exchange controls. Our generosity to big business and high earners has made the country vulnerable; we have to halt the export of funds out of the country by the rich.”

Bond said cost-cutting measures should also include the R154 billion in capital investment for the Brics New Development Bank. He said the R3 billion already spent last year on the project should be returned and invested in basic needs infrastructure.

“With such cost savings the value added tax – as poor people pay a higher share of their budget on taxed goods – can be reduced and zero-rated for more essential goods,” he said.

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Others such as the executive officer of the Green Building Council, Brian Wilkinson, said decreasing the demand for power “must be a major theme” in today’s speech.

“We acknowledge it is terribly important to have an energy supply-side debate around electricity generation; however, demand-side management that emphasises reducing consumption is an opportunity that is being completely underemphasised.”

Jacques Rousseau, who heads the Free Society Institute in South Africa, said a commitment to increasing education funding was critical to address the concerns raised during the student protests.

“But any increase in expenses requires either finding savings, or raising taxes, and South Africans already suffer a high tax burden. We hope the minister curbs wasteful government spending to minimise the seemingly inevitable increases in personal tax rates and possibly VAT.”


Dumile Cele, chief executive of the Durban Chamber of Commerce and Industry, said she hoped for a balance between expenditure and cost cutting to promote much needed growth in the economy.

“We need to create jobs and we can’t do that by only cutting costs,” she said.

Ben Bierman, of the specialist small business risk finance company Business Partners, said he hoped Gordhan’s speech would set the tone for a more collaborative approach between labour and business both big and small.

He called on the finance minister to slash red tape.

“The main tax concessions for business owners, namely small companies tax, turnover tax and the exemption on registering for VAT, are likely to remain. Any increase in the levels of these will boost entrepreneurial growth,” he said.

Bierman added that despite a tight Budget, there had to be money set aside as an emergency fund for deserving businesses that would otherwise fail in the difficult year ahead.