An agitated panellist at a PwC event outlined how people who have never even run a spaza shop are ‘given a multi-trillion-rand economy to manage’. Picture: Shutterstock
South Africans were enraged by the fact that one of the reasons for the proposed hike in the value-added tax (Vat) rate is to allow for an above-inflation increase to public sector wages.
Panellists at a PwC breakfast following the non-tabling of the February 2025 National Budget were quite vocal about the ANC and its lack of credibility to cut expenditure and keep the wage bill in check.
Busisiwe Mavuso, CEO of Business Leadership South Africa, said the lack of leadership is best illustrated by what is happening at local government level.
She explained how the path to the state coffers is laid out.
You just have to be unemployed with nothing to do because you have failed as an entrepreneur, in corporate South Africa, and basically everywhere else.
You need R12 to become an ANC member (wondering out loud whether it is still R12), then join an ANC branch, speak as loudly as you can, and it doesn’t matter if you make sense or not.
Somehow you get parachuted into branch leadership, then land a job at municipal level and you are sitting with people who have never even run a spaza shop, a visibly agitated Mavuso said.
They are given a multi-trillion-rand economy to manage.
“What did we think was going to happen … this is a classic case of thieves masquerading as government officials,” she added.
“That is why we are here. We are in this mess because we score a lot of own goals.
“It did not happen automatically. There was a deliberate decision by the ANC-led government to loot the state coffers. Once you have caused such a lot of damage for such a long time, we are naïve to think we can actually reverse that over a year.”
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Mavuso believes the government of national unity (GNU) will have the courage to cut the wage bill. The fact that it could prevent the budget from being tabled speaks volumes.
The message it sent was that the GNU is prepared to stop the budget process despite the risk of an international and domestic outcry.
It basically comes down to “we are not here to please and indulge the ANC”.
“During the last elections South Africans were liberated from useless and stupid policy decisions being made in Luthuli House and rubber-stamped in parliament.”
The majority in the GNU is not going to rubber stamp the decisions of the ANC, she added.
In the budget that was not delivered, National Treasury justified the proposed two-percentage-point increase in the Vat rate to 17% by saying that rich people pay most of the Vat.
“Over 75 per cent of VAT revenue is derived from households in the top four expenditure deciles, which roughly corresponds to households that spend R118 000 or more per year.”
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Qaanitah Hunter, outspoken political journalist and author, believes it is time for government to pick a fight with the trade unions (she actually said to p*#s them off). It is the easiest thing to do.
“You have nothing to lose. Your country is on the brink … It will not push it over because you are going to be bankrupt anyway and the people are not going to have jobs anyway,” she said.
“At the end of the day the country is sitting close to 76% debt to GDP so that a few million people can earn a decent comfortable rate. It is bad for your economy.” In 2022 government employed 1.2 million people.
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The position of Finance Minister Enoch Godongwana has become untenable. He must make cuts, but he must make the right cuts. However, few are convinced he has the will to do it.
Lullu Krugel, chief economist of PwC, says it has been years since South Africans last saw what fiscal policy and the budget should achieve.
Fiscal policy is supposed to be the growth mechanism.
“It is supposed to be anti-cyclical, and we have seen the complete opposite of that.
“We are supposed to see fiscal policy that stimulates growth and cuts taxes and puts money back into the system. We are seeing the complete opposite of that,” she said.
“We should not have gotten into a space where we needed to increase Vat by two percentage points. We have had years of promises about how things are going to be better, and it has not happened.”
Hunter noted that the funding model for local government does not work and never will.
“We can see this decline and when it eventually explodes it will have fundamental consequences to the economy that not even Eskom could have done.”
“Business is now doing the work of government to clean up municipalities and make traffic lights work. When we advocate for business participation there must be guard rails when government responsibility is outsourced to the business sector.
“It is like giving money to a drug addict,” she said.
This article was republished from Moneyweb. Read the original here.
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