People's Budget coalition unveils proposals

Extending the basic income grant (BIG) to all citizens and a halt on cutting personal and company taxes are some of the Budget 2006/07 proposals that a coalition of three civil formations has made in a bid to eradicate poverty.

Financing a universal BIG to all South Africans, the coalition said, would require between R15-billion and R32-billion a year.

A grant of about R100 per person a month would also boost economic activity, but it does not replace the need for job creation, it continued.

Speaking at the release of the People’s Budget campaign 2006/07 document on Wednesday, coalition representatives said the government should use extra revenue from taxes towards poverty-alleviation programmes as tax cuts mostly benefit the rich while depriving the government of the resources needed for sustainable growth.

The coalition—made up of the Congress of South African Trade Unions (Cosatu), the South African Council of Churches (SACC) and the South African NGO Coalition—also noted that over the past five years, tax cuts have created more problems in the second economy.

“We want a Budget that speaks to South Africans,” said Desmond Lesejane, of the SACC.

“As a result of tax cuts, instead of poverty-alleviation programmes, we end up paying more as a nation to address problems posed by poverty. We end up spending more on ill health of the poor; we end up paying more to fight crime. Our proposals seek to ensure that South Africa does not become a nation that watches as more suffer the impact of poverty.”

Cosatu economist Neva Makgetla said the coalition is also proposing the restructuring of value-added Tax (VAT), which she described as a regressive tax given that everyone pays the same rate irrespective of income and types of goods or services.

While calling for variable VAT rates, Makgetla said more basic goods should be zero rated, the standard goods rate should fall by 1% to 13% and the introduction of a luxury-goods rate has been proposed.—I-Net Bridge


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