Opposition party MPs made a strong call to the National Treasury on Friday to cut wasteful and inefficient expenditure by the government as an alternative to increasing VAT.
They also called for measures to promote economic growth and job creation, which they said was missing from the budget finance minister Enoch Godongwana tabled in parliament on Wednesday.
The budget’s proposal for a 0.5 percentage point increase in VAT in 2025/26 and the same increase in 2026/27 was also met with vehement opposition by opposition party MPs as adding to the cost of living burden on the poor. However, Godongwana stressed that the 2026/27 increase assumed that everything remained the same and could be dropped if circumstances changed.
He was speaking at a parliamentary engagement on the budget with members of four parliamentary committees, the two appropriation committees and two finance committees of the National Assembly and the National Council of Provinces.
National Treasury director-general Duncan Pieterse, Sars commissioner Edward Kieswetter and officials from Treasury and the SA Revenue Service (Sars) were also present.
On stimulating economic growth, Godongwana said this took time and required investment by the private sector, which needed to have confidence in the fiscal framework. The spending reviews demanded by DA and MPs had been incorporated into the budget but also took time, the minister said.
ActionSA MP Alan Beesley highlighted the incompetence and wastage in government, saying the Treasury would not have to propose taxes if this was addressed. He referred to the bloated cabinet and the opulent lifestyle of cabinet ministers, which was incongruous with the expectation that taxpayers tighten their belts.
Appropriations committee chairperson Mmusi Maimane also mentioned SA’s excessive number of foreign missions and the numerous agencies falling under various departments, which had limited value.
MK MP Richard Majola suggested getting rid of deputy ministers, addressing corruption and wasteful expenditure, and introducing a wealth tax.
EFF MPs bemoaned the fact that the budget did not contain a plan for job creation and questioned the faith that the Treasury placed in the private sector to generate growth when it was responsible for illegal financial outflows, base erosion and profit-shifting.
EFF MP Vuyani Pambo called for allocations to state-owned enterprises so they could deliver services to communities.
DA finance spokesperson Mark Burke questioned the Treasury’s GDP growth forecasts, which had been wrong 12 out of 15 times. GDP growth forecasts had a knock-on effect on revenue and debt projections.
Burke noted that between the rejected February 19 budget and this week’s budget, the 2024 GDP growth figure of 0.6% had been released yet the Treasury was projecting a growth of 1.9% in 2025, 1.7% in 2026 and 1.9% in 2027. The growth projection also seemed to have not taken into account the trade wars and the possible loss of SA’s benefits under the Africa Growth and Opportunity Act (Agoa).
Treasury deputy director-general for economic policy Boipuso Modise defended the Treasury’s growth projections, saying in-year forecasts were better than its peers, though Pieterse added that while they were rated good, there was room for improvement with medium-term projections.
Modise said there had not been enough time to include the 2024 growth outcome in the budget’s projections. She said the Treasury had done work on the risks facing economic growth, such as SA’s exclusion from Agoa. It was also concerned about the effect of geo-economic fragmentation on global and domestic growth.
MK MP Des van Rooyen called for a more expansionary fiscal stance, saying the budget failed to address deep inequality. He proposed leveraging the entire government sector balance sheet, using the assets of the Unemployment Insurance Fund, Government Employees Pension Fund and the reserves of the Reserve Bank for investment in high-impact sectors of the economy.
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