Pipe dreams built on debt?

Trade union Solidarity on 21 February expressed its discontent at the budget speech delivered in the National Assembly.

According to Gerhard van Onselen, economics researcher at the Solidarity Research Institute, the 2018 budget would put a further damper on economic growth. “There is no apparent deviation from the harmful ANC policy we have had to face for so many years. In fact, higher VAT and a higher fuel levy together with no real sign of a cut in government spending, in reality, put the economy on a weaker footing,” Van Onselen said.

Van Onselen contends that taxpayers and consumers will have to bear the heavy burden of ANC policy.
Van Onselen furthermore said that all the optimism about the curbing of government spending that followed Pres Ramaphosa’s State of the Nation Address was misplaced. “It appears that this budget is a continuation of the pipe dreams built on debt,” Van Onselen added.

Government has proposed a one percentage point increase in the value-added tax (VAT) rate to 15%.
The increase was widely anticipated in tax circles as it is arguably the most effective way of raising significant amounts of additional revenue. National Treasury expects the hike, which will take effect on 1 April 2018, to raise the lion’s share (R22.9 billion) of the R36 billion in additional taxes it hopes to collect in 2018/19 to stabilise the country’s fiscal situation.

Solidarity press release: 21 February 2018