The Democratic Alliance has released its ”alternative Budget”, two days ahead of Minister of Finance Trevor Manuel’s official Budget on Wednesday.
Briefing the media at Parliament on Monday, DA finance spokesperson Ian Davidson said the DA’s alternative Budget for 2005/06 ”is all about jobs”.
”In glaring contrast to the government’s weak answers to the question of chronic unemployment, the DA’s alternative Budget represents a comprehensive, costed policy platform personified by lower taxes, increased efficiency of governance, fiscal prudence and incentives for job creation, skills development and investment.”
While South Africa has one of the world’s highest rates of unemployment — stagnant at more than 35% for the past seven years — bold action is required on three fronts, namely employment incentives, investment and enhanced skills development.
To provide more jobs, the DA proposes — among other things — that for at least five years, business should be entitled to deduct 150% of the first R2 000 a month of new employees’ salaries for tax purposes.
”This intervention alone would finance the creation of half a million jobs in the first year,” Davidson said.
Further, individual households should be entitled to deduct up to R2 000 a month from their taxable income for permanent regular employment provided by them.
Turning to the generation of more fixed investment, Davidson suggested interest earned should be tax-free up to the greater of R12 000 or 10% of taxable income a year.
Taxation on retirement funds should be phased out over three years, and capital gains tax, estate duties and donations tax should be abolished.
To enhance skills development, R12,6-billion should be spent over five years to eliminate the backlog in schools’ facilities and resources, and a nation-wide bursary voucher programme should be created to give the most academically promising 350 000 children from low-income families the opportunity to receive a better school education.
In addition, the DA proposes opportunity vouchers to assist young people to obtain work experience and training, start small businesses or further their studies by reducing the costs of any one of these options, and a tax rebate equivalent to a third of tertiary-institution tuition fees to students or their parents for a maximum of four years of successful study.
The DA also proposes reducing the government’s spending on consultants by at least 25% in 2005, ruthless action against people defrauding the state with ghost civil servants, and merging the land affairs, environmental affairs and tourism, and water affairs and forestry departments into one.
The government communication service should also be abolished, and the responsibilities of the public works and public service and administration departments allocated to other departments.
Further, the sports and recreation department should be abolished, non-violent awaiting-trial prisoners should be released with electronic tagging devices, and a fifth of the full-time defence force should be replaced with reservists.
”All in all, our budget includes R2,3-billion-worth of tax cuts to encourage job creation, R2,75-billion-worth of tax cuts to encourage foreign and domestic investment, and over R5,5-billion of additional expenditure to reform the education and training system,” Davidson said. — Sapa