LISTEN | Budget crunch: tough choices for South Africa

South Africans will soon learn how their finances will be affected as the government scrambles to address the budget crisis.

Finance minister Enoch Godongwana is set to deliver his national budget speech in parliament on Wednesday after the budget was sent back to the drawing board last month when parties in the government of national unity (GNU) rejected a proposed VAT increase.

Godongwana told the Sunday Times that the additional revenue from the proposed VAT hike was intended to fund the “Covid-19 grant”.

Speaking ahead of Wednesday’s budget address, parliamentary chairpersons from the finance cluster expressed concern over the country’s financial situation.

Listen:

'A point of significant crisis'

Standing committee on appropriations chair Mmusi Maimane warned: “We are now heading to a point of significant crisis, that is a reality.

“We are no longer making choices that are good or bad we are making choices that are worse or much worse. We are at the peak of [personal income] taxation, you can’t tax citizens more ... we are really now at a point where we have to make tough decisions.”

Maimane said he does not endorse a VAT hike or further borrowing but stressed that difficult choices must be made regarding government expenditure and efficiency.

Spending under scrutiny

A key issue under scrutiny is the future of the social relief of distress (SRD) grant. If VAT is not increased, Godongwana said a revenue source for the grant must be found.

“We must really confront in its honest sense whether the government believes we should continue the SRD grant or not,” Maimane said. “You might say it's a tough decision to make, but one that has to be confronted.”

Concerns were also raised about government spending on international commitments.

“There are harsh realities about some of the international work that we’ve raised on this platform,” Maimane said. “You’ve got to think about the policy decisions whether you deploy more troops to the DRC, you fund other international [work].”

Government 'wasting money'

“While you might morally agree that we need to pay people, and we all agree that when people are unemployed we need to shield them — the question is not the moral question here, the question at this point we are confronting is an affordability question,” Maimane said questioning whether South Africa should continue to spend money in its SANDF deployment in Congo and in the ICJ genocide case.

Scopa chair Songezo Zibi said: “We are wasting money. The government pays 45% more than a company. We can’t do that, and yet we talk about where the budget is going to come from. We don’t talk about how we stop wasting money.”