GOOD Statement by Brett Herron ,
GOOD Secretary General
10 March 2025
Attempts to table the 2025 budget have degenerated into political farce. The ANC is desperate to save face after last month’s proposed budget was washed up on the GNU rocks, and the DA is just as desperate to seize the moment to prove it has the power to put a spoke in the ANC’s wheel.
Neither party’s position is pro-poor, or pro-justice. Though sharply differing in approach, both parties are effectively articulating the same business-as-usual approach to the budget that has failed to narrow inequality or reduce poverty since apartheid ended 31 years ago.
The DA is correct that the dividends of reducing government wastage, while growing the economy, will eventually trickle down to poor people. But how long does the DA think those people living in shacks, without sufficient income to feed themselves, should patiently wait?
The ANC is correct that more money is needed to increase the country’s social spend, to fund education and develop logistics infrastructure. But increasing VAT, without having turned off the waste taps, is extremely short-sighted, poor-unfriendly and unsustainable.
There are progressive ways for the fiscus to raise additional funding without having to increase VAT, income or company tax, but this would require courageous decision-making in the GNU about inequality and the increasingly pressing need to redistribute wealth.
One such immediately available mechanism would be to reduce the cap on tax-free retirement savings. A very small proportion of South Africans can afford to save R350,000 a year and put it away, tax-free, for their retirement.
Targeting revenue such as this, from people who can afford it – instead of all people, such as a VAT increase – will make up a large chunk of the R58 Billion budget shortfall articulated in last month’s budget-that-wasn’t.
It is not uncommon for partners in coalition governments to use the passing of budgets to flex their muscles and dig in their heels. However, the state of the economy – now further strained by Donald Trump’s America – dictates that GNU partners don’t have the luxury of time for political theatre.
Should the Minister of Finance announce a 0.5% VAT increase, as has been speculated in the media, the GOOD Party’s decision on whether or not to support the budget will depend on the rest of the budget.
GOOD will want to see clear undertakings in Minister Godongwana’s text that Treasury will use the next 12 months to prepare for a comprehensive budget overhaul to be announced next February, including allocative efficiency, waste disposal, a Basic Income Grant linked to the official poverty level, and a wealth tax.
GOOD proposes that the scope of work to fix the budget should be articulated through a budget lekgotla attended by all parties to the GNU. This meeting must be convened in the next couple of months to create sufficient runway for Treasury to do its work.
The budget lekgotla, providing a platform for GNU parties to sort out their differences proactively, must become an annual event on the budgeting cycle.
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