/ 19 February 2008

Budget coalition calls for basic income grant

The People’s Budget Coalition has reiterated its call for a basic income grant as part of its national budget wish list. Finance Minister Trevor Manuel tables the national budget on Wednesday.

“The primary concern of [the People’s Budget Coalition] is how the budget is used to reduce poverty and unemployment,” said the coalition — which comprises the Congress of South African Trade Unions, South African National NGO Coalition and the South African Council of Churches — on Tuesday.

It further expects Manuel to table “concrete proposals” on increasing the age for the child grant to 18 years, as hinted at by President Thabo Mbeki in his State of Nation address last week.

In addition, the coalition expects Manuel to increase social grants above inflation to help the poor head off skyrocketing food prices, and increase the amount of free water and electricity from the current 6 000 litres and 50kWh respectively.

In the wake of South Africa’s power crisis, the coalition called for “substantial investment” in renewable energy and abandonment of the pebble-bed modular reactor.

On revenue, the coalition called on the government to increase the deficit by a “modest amount” to help get more resources that could be directed towards social and economic development. “The [coalition] questions the wisdom of planning for surplus in the midst of poverty, inequality and unemployment,” it said.

Other items on the list include allocations for economic development to fast-track the recently announced industrial policy strategy and land redistribution to provide land and post-settlement support for poor black farmers.

The coalition also wants to see increased investment in education, education infrastructure and healthcare, and the lowering of value-added tax (VAT) to 13%. “VAT is a regressive tax that affects the poor who spend a large portion of their income on food,” it said.

Meanwhile, trade union Solidarity has also drawn up its own budget expectations, which include a budget that supports the production sector to help create jobs and reduce poverty.

“Fiscal policy must be employed to strengthen our country’s production sector. The historic idea of using it as a redistribution tool, which increases consumption, reduces saving and hampers production, must be done away with,” it said.

The union’s proposals include that the government reduce company taxes, abolish plans to tax dividends, scrap import taxes on capital goods that can generate or conserve electricity, and relax exchange controls.

“South Africa is facing serious economic challenges, with both domestic and international problems negatively affecting our country’s economy. The minister’s handling of this issue will demand more courage than was the case in previous budgets,” Solidarity said. — I-Net Bridge

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