The People’s Budget Campaign, representing NGOs, church groups and trade unions, has motivated for a modest increase in taxes relative to gross domestic product (GDP) and an increase in state borrowing and a cancellation of the third tranche of fighter jets for the South African National Defence Force.
At a briefing on Monday — ahead of Wednesday’s presentation of the national Budget by Minister of Finance Trevor Manuel — Bishop Joe Seoka of the South African Council of Churches also called for more efficient funding and investment of the government employees’ pension fund.
Speaking on behalf of the South African Council of Churches, the Congress of South African Trade Unions — which is in alliance with the ruling African National Congress — and the South African NGO Coalition, the bishop said the “People’s Budget Campaign has investigated ways to fund greater government spending on land reform, housing and infrastructure and the basic income grant”.
Seoka called for a modest increase in taxes relative to GDP “with the burden falling primarily on the rich through both increased income tax and higher VAT on luxuries”.
A small increase is also required in government borrowing relative to the GDP “and stronger efforts to ringfence and renegotiate apartheid debt”.
At present the tax burden is at about 25% of GDP with spending at about 28%.
He also called for a decision not to take up the third tranche of fighter jets in the 1999 arms procurement programme.
While recognising that the government has made “substantial efforts” to improve the potential of poor households to earn incomes “and engage with the economy” and to restructure the formal sector towards job-creating industries, “much more needs to be done”.
“We welcome the relatively expansionary stance adopted by the government since 2000 when compared to its previous extremely contractionary approach.”
However, more rapid increases in spending are needed to overcome the backlogs left by apartheid, said the bishop.
Meanwhile, Western Cape Premier and New National Party leader Marthinus van Schalkwyk said he expected tax relief especially for people at the lower rungs of the tax base. He also expected movement on dropping remaining exchange controls. — I-Net Bridge