Godongwana’s Mini-Budget – which seeks to Raise taxes – will Sharply Hurt the Poor and Escalate the Cost-of-living Crisis

The Medium-Term Budget Policy Statement delivered by Finance Minister Enoch Godongwana highlights that the ruling party has run out of ideas to grow the economy and create jobs. Combined with reckless spending this has left South Africa in a dire financial strait, which will disproportionately hurt the most vulnerable members of our society in the face of the escalating cost-of-living crisis.

Four years since former Finance Minister Tito Mboweni delivered the ‘Aloe Vera’ Budget Speech in 2019 where he warned that unless public spending is controlled the country will face a fiscal cliff, Godongwana’s mini budget on Wednesday showed that unproductive and irresponsible spending by the ruling party has rather ballooned while the economy was mismanaged.

Instead of providing new and innovative ideas to tackle the cost-of-living crises faced by millions of South Africans, Minister Godongwana’s budget will inflict more pain with steep spending cuts, planned increases in taxes of R15 billion and below-inflation adjustments for frontline services such as healthcare, policing, and education.

This while the minister failed to address the government’s key impediment to economic growth: the mismanagement of public money and the looting of public coffers. South Africa does not have a funding problem but simply does not get enough return on the money it is currently spending.

By now, the age-old line that economic reforms are being accelerated, and legislation will be changed to improve private sector participation, also does not provide any hope to South Africans as President Ramaphosa has promised these since elected in 2018 – and five years later there are no results to be shown.

ActionSA reiterates that the incredibly difficult financial situation in which the country finds itself is a product of the harmful legacy of the president and the ruling party. Ramaphosa and the ruling party should, therefore, not again seek to place the burden on the South African people – as it is attempting to do – who are already overburdened by the deepening cost-of-living crisis.

In line with the policies adopted at our policy conference in September, ActionSA believes our economy should urgently be stabilised by increasing competition in our electricity generation and transportation operations, increasing infrastructure investment, and reversing the breakdown in the rule of law by increasing prison sentences and deploying additional police personnel. These measures will help to grow the middle class which will expand the tax base and improve our fiscal situation.

In this regard, ActionSA welcomes that infrastructure is the fastest-growing budget item but is deeply concerned that frontline services such as healthcare, policing and education will not receive similar support. The over R120 billion planned cuts to housing and other services over the next three years are deeply concerning and will directly affect the poor and marginalised in our communities.

ActionSA also believes that all departments should conduct an organisational and reprioritise funding towards frontline service delivery, including doctors, teachers, and police officers.

Duplicated departments should be merged and reduced to under 20 departments, in line with proposals adopted by delegates at ActionSA’s policy conference, to reduce inefficiencies and save money. In this regard, it is deeply concerning that the National Treasury is planning to establish another infrastructure delivery office when such an office already exists within the presidency – an inherent duplication.

Change is needed to fix our economy, curb reckless spending, and broaden the tax base. Clearly, South Africa is headed for trouble under the ruling party, and therefore every South African should register to vote and vote for action in 2024. We cannot allow the ruling party to burden our people any longer.