The ACDP believes more must be done to reduce corruption, and wasteful and irregular state expenditure.
In the midst of this season of hope with the election of President Ramaphosa, we are today faced with a very tough budget - a legacy of the looting, plundering and maladministration that took place under President Zuma.
Thankfully, economic growth is set to improve from October's projected 0.7per cent of GDP to 1.3 per cent, due to heightened investor and business confidence. This will hopefully translate into improved revenue collection. The central fiscal objective must be to stabilise the national debt-to-GDP ratio by closing the budget deficit. One can achieve this by not only increasing revenue, but by also reducing state expenditure.
The ACDP believes that far more can be done in this regard by addressing corruption, and reducing wasteful and irregular expenditure. We believe that more resources should be given to the Hawks, National Prosecuting Authority, the Asset Forfeiture Unit, and Special Investigating Unit in order to recover misappropriated and stolen funds and jail those responsible.
The projected reduction of tax revenue of R50.8 billion in 2017/18 will result in the fiscal slippage we were warned against. The figures snowball in the outer years - with tax revenue projected to fall short of projections by R69.3bn in 2018/19 and R89.4bn in 2019/20.
The consolidated budget deficit for 2017/18 is expected to increase from February's estimate of 3.1% to 4.3% of GDP - or from R149 to R203 billion. The concern is that, in contrast to projections set out in February's Budget, the revised projections are set to remain at this elevated levelover the medium term (previously the budget deficit was set to decrease).
Debt service costs remain the fastest growing budgetary item - set to be R163.3 billion for 2017/18. The total gross loan debt is set to reach the astonishing figure of R3.415 trillion or 59.7 per cent of GDP by the outer year 2020/21. This is a matter of great concern, and is not sustainable in the long run given the relatively small tax base in the country. It will also crowd out other socio-economic spending priorities.
While we appreciate that a commission of inquiry will look into the tax affairs, why don't we rather implement those useful recommendations of the Davis Tax Commission.
The contingency reserve has been pared down to R16bn over the next three years. The expenditure ceiling has already been breached with the SAA bail-out.
We also know that SOE's and particularly Eskom present significant threats not only to the fiscal outlook, but to the entire economy, given the substantial government guarantees that have been granted. Yet we see ongoing poor governance, wastage and irregular expenditure at various SOEs such as being unearthed in the Eskom Inquiry.
On this score we are also opposed to the nuclear energy build programme. Not only is it unaffordable, but it is also unnecessary given Eskom's surplus energy capacity.
We also do not support the continued bailouts for SOE's, such as the R10 billion given to SAA, which may be partly financed by selling the 'crown jewels' - government's stake in Telkom, as well as the R20 billion needed by Eskom.
We regret that it has been necessary to increase personal taxes, VAT and the fuel levy, in order to balance the books. Had government been better stewards of state finances, and not allowed state capture and widespread corruption, this would not have been necessary."
ISSUED BY: STEVE SWART MP
21 February 2018
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