Postponement of an SA government event is not an unusual occurrence. I suspect it also happens regularly in other governments, institutions that are clearly too large to manage effectively. But the annual budget! Postponement of this sacred ritual gives rise to all sorts of anxiety about the state of government.
First, there is anxiety concerning the competence of our executive, which is well founded. How does this happen? It’s not like the budget date gets sprung on the finance minister or his officials. They must have realised the budget was bound to be controversial and that solutions — like a 13% VAT increase would be vigorously contested.
So why was the cabinet only informed two hours before the budget was to be presented? This may of course be arrogance and hubris, but I vote for incompetence, for SA’s seeming inability to act before we get to the edge of a cliff. Well, this time we fell over the edge and look like bumbling asses.
Second, where does the Treasury find the missing R60bn if it can’t raise VAT? The Financial Mail tells me there are three other possibilities — a 5 percentage point increase in company tax (from 27% to 32%); a 7.5% surcharge on personal tax; or borrowing an additional R60bn.
In my humble opinion (though I did, for several years a long time ago mark thousands of Economics 1 essays on the budget, and since then I glaze over at every mention of it), the best option is a combination of an increase in company tax and personal tax. I do, however, take heed of SA Revenue Service (Sars) commissioner Edward Kieswetter’s comment that a better tax administration (I imagine that means a better resourced Sars) that could raise some of the R800bn that goes uncollected each year is preferential to a tax increase.
If Kieswetter is able to support his argument — I imagine he is — that is clearly the preferred option. It also goes to the point that the credibility of the tax system is rooted in the manner in which the revenue is spent. I have little doubt that companies and individuals (and even consumers) would be prepared to pay higher taxes if the provision and quality of public services was commensurate with the amount spent.
But given the state of our roads, rail and electricity provision — not to mention our public health, transport, education and policing — every person who pays their taxes, including VAT, cannot help but feel ripped off. Take a few billion off the police budget and give it to Sars and I vouch that the quality of police service will not decline (it may even improve) and the tax take will increase.
And while this is being considered, take a look at public sector salaries. I have no doubt a comparative study of middle-income country public sector salaries would reveal that most SA public servants are at the high end, despite the appalling outcomes in most of the large expenditure areas.
Third, the chattering classes and the media are quick to blame the budget day fiasco on the alleged dysfunctionality of the coalition government. On the contrary, it has demonstrated the laudable maturity of government. Particularly encouraging is the bipartisan opposition that sent the finance minister back to the drawing board. This was not a case of awkward junior coalition partners alone refusing to toe the line. Senior ANC ministers also voted against the VAT increase.
It’s not surprising that the tone-deaf DA tried to take full credit. How much better for it and the country if this incident had been lauded as an outstanding example of how a coalition government was able to ensure government stability precisely to pass the one vote that has to be passed. The fact is our democracy held up rather well, despite hysterical efforts to talk it down.
The same could not be said of other democracies. Take the US. Anyone who witnessed Donald Trump and JD Vance, their long arms (and neck ties) hanging between widespread legs, berating the leader of a relatively tiny war-torn country, must have wondered about the quality of a democracy that elects such Neanderthals to lead them.
I understand that their personal backgrounds — Trump, heir to a New York real estate empire, where he treated his suppliers and tenants with similar brutality; Vance who learnt social grace and diplomatic behaviour at the feet (where he remains) of such well-known democrats as Peter Thiel and Elon Musk — have something to do with their appalling conduct. But it’s about a lot more than that.
The Ukraine war (and the Palestinian tragedy, and the treatment by the US of Europe, Canada, Mexico, Panama and, of course, SA) is about the birth pains of a new world order; one in which the US will share its hitherto uncontested global dominance with two other junior partners — Russia (because of its nuclear arsenal) and China (because of the size of its economy).
The Ukraine war, initiated by Russia’s invasion because Vladimir Putin saw his best prospects of territorial expansion diminishing as his neighbours signed on to the EU and Nato (not, as a small clique of SA Russophiles insist, because he feared a US invasion of Russia. US unconditional support for Israel is predicated on the view that the Middle East belongs to the US. US aggression towards Mexico, Canada, Panama and Greenland is intended to reflect uncontested US dominance of the western hemisphere, whose national components must pay a tithe for protection.
Each region will be absorbed into this new world order in different ways commensurate with the interests of each of the three “great powers”. Ukraine will be reabsorbed into Russia’s sphere of interest along with the rest of central Asia, and possibly the Baltic states, but the US’s graciousness will be rewarded by giving it access to the minerals it covets.
The Middle East belongs to the US, with Israel and Saudi Arabia as its principal local representatives; the Iranian regime will be changed. South and East Asia is a problem. Taiwan will go to China, but other countries are too closely tied into US interests and are too big and too rich (Japan, South Korea, Indonesia) to simply be ceded to another global sphere of interest.
China may be satisfied by getting privileged access to the enormous markets of other spheres of interest. After all, its expansionism has largely taken an economic form rather than the aggressive militarism of the US and Russia, except in relation to Taiwan. Europe will be contained by the withdrawal of US protection, its own internal divisions and its effete pretensions.
Sub-Saharan Africa does not figure high on the agenda except, as ever, for its natural resources. A combination of Russian mercenaries and local dictators may bring about the political stability necessary to exploit their riches and US economic power can bring to heel those, like SA, who meddle in matters that don’t concern them, such as Palestine.
This will not be plain sailing. In each region there are diverse countries and economies large enough to assert independence from these arrangements. What to do with India and Turkey? Japan? Vietnam? Canada, Mexico and Brazil? SA? In general the Global South will not be the pushover it was during the Cold War and the years of uncontested US dominance. These countries are our hope, the countries that will not be easily absorbed or aligned with in any of these spheres of interest.
We live in interesting times.
• Lewis, a former trade unionist, academic, policymaker, regulator and company board member, was a co-founder and director of Corruption Watch.
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