Well, let’s hope we’re gon’ be alright, Mr Gigaba
The budget speech was going to be a hard sell from the start, but was it delivered by the wrong man?
Malusi Gigaba will go down in history as the first person in the democratic era to bump up taxation on goods and services under the ANC government – but that is the least of his worries.
As controversy continues to swirl around him, Gigaba announced a one-percentage-point increase in Value Added Tax in the 2018 Budget on Wednesday in order to raise revenue to fund government’s spending needs.
Raising the cost of living for all households is a hard sell at the best of times. For a scandal-fatigued and already hard-pressed nation, the last thing to demand is that consumers dig deeper to finance former president Jacob Zuma’s disastrous legacy.
Apart from the drain on public resources and crippling state-owned enterprises, Zuma had bequeathed the new government the burden of funding his fee-free education plan, which was hastily announced in December without proper consultation with the National Treasury.
With tax collection undershot by R48.2-billion, options for raising revenue were limited.In truth, Gigaba had little to do with the compilation of the budget, or the decision to raise VAT. It could easily have been someone else presenting the budget had President Cyril Ramaphosa opted to swing his axe before Wednesday.
Raising the VAT rate for the first time in 25 years ahead of what is likely to be a highly contested election next year could be politically suicidal for the ANC government and required public trust in the Finance Ministry.
Gigaba and his deputy Sfiso Buthelezi are both haunted by corruption allegations relating to state capture and were Zuma’s controversial choices to replace the much-trusted Pravin Gordhan and Mcebisi Jonas.
Gigaba’s affliction on Wednesday was that he had to sell tax hikes, for VAT, personal income tax, the fuel levy and sin taxes, with questions mounting about his credibility.
For the first time since 1994, a political party in parliament boycotted the presentation of the budget. The EFF stayed away from the sitting, labelling Gigaba as “disreputable, corrupt and unpatriotic”, and a “stooge” of the Gupta state capture network.
To add to Gigaba’s woes, it emerged on Wednesday that a full bench of the North Gauteng High Court had ruled that he had deliberately lied under oath and breached the constitution in the matter involving Fireblade Aviation’s application to open a VIP terminal at OR Tambo International Airport.
When Gigaba addressed a media briefing ahead of the budget presentation, he called for “resilience” from South Africans to take the pain of the tax increases. He said the hikes were necessary to stabilise public finances and accommodate new spending priorities, including the R57-billion allocation for the higher education and training plan.
Gigaba said the poor would be largely cushioned from the sting of the VAT escalation due to zero-rating on basic foods and would benefit from above inflation increases to social grants.
He said the moves to cut expenditure by R85-billion and increase VAT would stave off another credit ratings downgrade as it showed that government was prepared to take tough decisions.But Gigaba was roundly slammed by opposition parties, with the DA saying his announcements were “nothing less than a massive body blow to poor South Africans”.
The finance minister was unable to share in the general goodwill surrounding Ramaphosa’s election and state of the nation address, with the opposition objecting to Gigaba delivering the budget and taunting him throughout the speech.
At the media briefing, Treasury director-general Dondo Mogajane said he had to reassure his staff to persevere with preparing the budget despite the “noise” and political uncertainty over the past few weeks.
He said finance ministers came and went but the Treasury’s work was dictated by the constitution and not by individuals.
“It has been painful, as you can imagine, with a new minister here and there,” said Dondo in reference to the axing of Gordhan and Nhlanhla Nene before him. But the budget had to be produced irrespective of who read the speech.
Gigaba’s first budget was an uphill climb, partly because he was the bearer of bad news and mostly because he was not the person who could rally South Africans to give the government more of their money.
To achieve the broad objectives of the budget to restore economic confidence and stabilise public finances requires more than a finance minister rapping Kendrick Lamar lines: “We gon’ be right, we gon’ be alright” – with accompanying hand gestures.
It requires gravitas, public trust, out-of-the-box thinking and, mostly, credibility.