The DA supports the introduction of a universal basic income grant (BIG) which it estimates will cost R157bn a year, but only as long as there is economic growth to underpin it.
The party’s social development spokesperson, Bridget Masango, said at the launch of its alternative budget on Monday that the introduction of a BIG of R585 per month for the unemployed aged between 19 and 59 should be contingent on the availability of revenue derived from sustained economic growth that the DA believes can be achieved with its market-orientated policies and through savings.
“It is only when the government does accrue the necessary savings, achieve a budget surplus, implement the requisite policies that would spur economic growth and is able to substantially reduce debt could a BIG grant be tabled for serious consideration,” the party’s alternative budget document states.
Questioned about the disjuncture between introducing a BIG now and the time it would take for economic growth to pick up, DA finance spokesperson Dion George said they had calculated that the BIG was affordable now even without higher economic growth provided the proposed savings were made.
The DA has urged finance minister Enoch Godongwana not to announce any tax increases in the budget he tables in parliament on Wednesday. This is because of the stressed financial situation faced by South Africans and the already onerous tax burden. It believes not raising tax rates is affordable.
“We shall not endorse the implementation of any additional taxes or increment in tax rates as an increase in these figures would impede economic growth and discourage investment, ultimately hindering the nation’s recovery from the current cost-of-living crisis,” Masango said.
Masango, George and his deputy Ashor Sarupen outlined the DA’s alternative budget proposals at a media briefing.
The DA’s proposed budget assumes GDP growth rates of 3.8%, 4.4% and 4.4% over the next three years, a far cry from the 0.3% forecast by the SA Reserve Bank for 2023.
Masango stressed that social grants should be increased by the rate of inflation.
Among the expenditure cuts totalling R200bn in 2023/2024 proposed by the DA were a freeze on public sector wages other than those included in the occupation-specific dispensation, an action that would yield R140bn in savings over three years. Another R180bn could be saved over three years by reducing the number of “millionaire” managers in the civil service.
Other big-ticket savings over three years, which the DA believed could be achieved, were R15bn through more efficient procurement and the reduction of irregular expenditure and corruption; R60bn in the form of debt service costs from the Eskom and Sanral debt transfers; R4.68bn through cutting the budget for national health insurance; R5.25bn by slashing VIP protection and security services; and R4.5bn by shutting down the National Youth Development Agency.
In response to the statement by President Cyril Ramaphosa in his state of the nation address that Godongwana would announce details of a tax incentive for residential and commercial solar installations in his budget on Wednesday, the DA has proposed an emergency solar rebate over three years for residential properties at an estimated cost of R4bn.
The scheme proposed by the DA would take the form of a 100% deduction for the cost of installed solar equipment capped at R100,000. Participants would finance the upfront cost of installation and claim the deduction against taxable income during the submission of their annual returns.
Other tax measures proposed include raising the threshold on taxes on interest to R500,000 and increasing the annual tax-free savings limit from the current R36,000 to R100,000. Tax relief measures should also be introduced for small businesses.
George reiterated the DA’s demand that fuel levies be dropped and the basket of zero-rated food items be expanded immediately to include bone-in chicken, beef, tinned beans, wheat flour, margarine, peanut butter, baby food, tea, coffee and soup powder. Removing the fuel levy would cost R96.7bn in 2023/2024 while expanding the zero-rated food basket would cost R18bn, according to DA estimates.
To bolster the anti-corruption drive of the National Prosecuting Authority, the DA proposes to allocate it an additional R1.9bn in each of the next three years.
The DA does not support the government taking over some of Eskom’s R420bn debt without a comprehensive plan to unbundle it and change its funding model. Nor will it support any bailouts for failing state-owned enterprises which it says should be privatised.
On economic growth, George said “major reforms are required for SA to thrive economically. This starts by removing government-imposed barriers to growth.” The rigid policy environment must be deregulated and market forces and individual freedom allowed to flourish. Economic growth would support fiscal sustainability which should be achieved through debt reduction and careful expenditure management.
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