‘Don’t throw a wet blanket over our economy, Gigaba’
Four prominent South Africans share their wish lists for the finance minister’s budget speech
All eyes and ears will be on Finance Minister Malusi Gigaba when he presents the annual budget speech in parliament on Wednesday at 2pm. It is only the second budget that Gigaba, who has been in the Treasury’s top seat for just under a year, has had to prepare, after he presented the midterm budget in October. With the likelihood of a cabinet shuffle looming, many believe it could be the former home affairs minister’s last.
Industry leaders and economists have weighed in with their own wishlists of how they would like to see national fiscus distributed.
Here is what they told Times Select:South African Chamber of Commerce and Industry (Sacci) CEO Alan Mukoki
The objective of the chamber to “ensure adequate protection of the interests of business” is clearly reflected in Mukoki’s hopes for the budget.
He says Sacci, which comprises more than 20,000 members from small, medium and large enterprises, wants clear pronouncements on how the state plans to close the budget deficit, as well as how it plans to reduce the high debt to GDP ratio.
“We also hope the budget will pronounce on the rebasing and remedial action plan around the issues raised by the ratings agencies, including the big capitalisation issues around the state owned enterprises and the issues of [poor] corporate governance at SOEs,” Mukoki said.
The chamber also wants to know how free tertiary education is going to be funded, given the fiscal constraints.Sygnia Asset Management CEO Magda Wierzycka
The often candid and forthright economist left little to the imagination regarding her interests. The biggest issue she wants the budget to address is the part privatisation of SOEs.
“The part sale of SAA would not be a bad idea,” Wierzycka said.
“Inject private expertise into SOEs where middle management is missing. Bringing in that experience would help to stabilise them.”
Wierzycka, who this week offered a R500,000 reward for information leading to the whereabouts and arrest of fugitive Ajay Gupta, said she wanted Gigaba to commit to strong budgeting processes around SOEs, which included no future bailouts.
Weirzycka said she wanted to see a more sensible and affordable plan for free education based on a longer “phasing in” model which would include the reallocation of resources to make it viable.
She added that the only effective way the government had of raising funds was with taxes, but this would adversely affect the poor.
“The only way effectively to raise money is VAT. We have a very small tax pool and we are stuck in a cycle of tax increases just to plug holes in the budget and we all pay the price, especially the poor.”Chief economist of the Efficient Group, Dawie Roodt
Roodt drove home the point of cutting state spending, an often contentious point in the budget speech.
He also wants the National Health Insurance scrapped because he feels it is not affordable.
“The message that state spending will be curtailed is the single most important message. We need to spend less and more efficiently.
“It’s like a wet blanket smothering the economy. There are just too many civil servants who get paid too much.”
Shifting the focus of the tax base is another move Roodt wants to see and he hopes Gigaba will remove capital gains tax, which he describes as “immoral”.
“Some taxes are better than others and we need more emphasis on indirect taxes like VAT and fuel, which should be increased, and less on direct taxes like company and personal income tax, which need to be reduced.”
Roodt called for even more cuts when he said that Gigaba should “get rid of the youth subsidy” because he believed it was not working.
“We also need to relook the education and budget and reopen teacher colleges.”Economist Thabi Leoka
Economic strategist Leoka had three points on her wish list. In her own words:
1. The medium-term budget policy statement revealed that the spending ceiling was breached by about R3.9-billion. We should go back within the spending limits.
2. I’d like to see a significant reduction in the revenue shortfall which is estimated at about R50.8-billion
3. I”d like to see a reduction in the budget deficit to about -3% of GDP and a stabilisation of the debt to GDP ratio.
* Check Times Select on Thursday for Leoka, Roodt, Mukoki and Wierzycka's responses to the budget speech