The South African Communist Party’s (SACP) general secretary, Dr Blade Nzimande, says the party acknowledges that the 2018 budget speech delivered by Finance Minister Malusi Gigaba last week comes at a challenging time for the country, with a near R50-billion fiscal deficit and an unsustainable public debt over the medium term.
“It is a debt that threatens to undermine any latitude for sovereign developmental policy implementation; demagogue and populist responses to the budget should therefore be avoided,” Nzimande said during the party’s press briefing earlier today.
The communist party’s general secretary, who was axed as the minister of higher education and training last year during former President Jacob Zuma’s final cabinet reshuffle, said much of the state’s deficit is “directly attributable to the parasitic looting of public resources by the state capture phenomenon”.
Nzimande said the country’s working class and the poor bore the brunt of austerity measures caused by the “parasitic looting”.
He said the SACP was extremely unhappy with the increase of value added tax (VAT). VAT is going to increase by 1% to 15%.
“It marks the possible beginnings of regressive creep. While some basic food stuffs are zero rated, the working class and poor do not live on bread and pap alone,” he said.
He added that these families would be further affected because some of the essential items they pay VAT for are not zero-rated, citing school shoes as an example.
“At least it is the first indication in the right direction that the ANC NEC is saying expand the number of zero-rated products from VAT,” Nzimande said.
READ MORE: ANC proposes additional zero-rated items, sends four NEC members to Luthuli House
The general secretary said Gigaba’s assertion that the 20% poorest will be unaffected by the VAT increase is untrue.
“What is more, other indirected taxes like the increase in the fuel levy will further impact on the cost of living, especially for the poor,” he said.
Nzimande said the macroeconomic impact of the vat increase would dampen demand, affect GDP growth and negatively influence the creation of employment opportunities.
He said the above inflation increases on social grants were a compensation in light of the VAT increase and that there was a “deeper structural concern” to be addressed.
“In essence, the budget is reaching for a social compact with the poor, an agreement with the poor – increased social grants payment in exchange for increased VAT,” Nzimande said.
He said the VAT increase went against President Cyril Ramaphosa’s reasoning outlined in his Sona, which was that industrialisation, infrastructure development, land reform or leveraging investment into job creation would stimulate a productive economy.
“The implicit logic of the social grant for the VAT deal is the perpetuation of a welfareist and not active developmental approach,” Nzimande said.
He added the party would campaign to ensure that when the budget for the following year is tabled, the VAT increase would be reversed and that other measures would be taken to deal with the deficit. He said these measures should include the “active recovery of billions of stolen capital, rigorous measures to address tax base erosion and illegal capital flight and a wealth tax”.
DA leader Mmusi Maimane has launched a national petition against the VAT increase.
However, the SACP general secretary said the party condemns the DA for deciding on such an action because it is against a wealth tax.
“They pretend as if they are siding with the poor when that helps them actually to deflect attention from the fact that they don’t want a wealth tax. You can’t ask the poor to subsidise the poor, we need the rich to be taxed so that we are able to meet the needs of ordinary people.”
http://https://www.citizen.co.za/news/south-africa/sacp-ready-for-cabinet-talks/
