Cosatu has medium-term budget hopes

Patrick Craven. Picture: Michel Bega.

Patrick Craven. Picture: Michel Bega.

Cosatu has significant expectations from the medium-term budget, spokesman Patrick Craven said on Tuesday.

“Cosatu called upon [Finance Minister Pravin Gordhan] to introduce… badly needed tax reforms to bring about a more equitable tax regime,” he said in a statement.

Some of the recommendations by the Congress of SA Trade Unions (Cosatu) included a progressive tax system with a tax category for the super rich, a solidarity tax to cap the growth of the earnings of the top 10 percent and accelerate the earning of the bottom 100 percent, and an increase in corporate tax.

It wanted zero-ratings for medicines, water, domestic electricity, education materials and additional staple foods, Craven said. There also needed to be export taxes on strategic minerals and metals.

On education, Cosatu felt there were still inequalities from the apartheid education system that had not been overcome. “Most black and African schools remain badly under-resourced, under-staffed, unsafe and badly prepared to produce well-educated matriculants,” said Craven.

“The fact that thousands of schools still lack basic sanitation, experience massive overcrowding and frequent incidents of crime and violence points to the desperate need for decisive leadership and intervention by government in the education system.”

Cosatu was concerned about the state of most public healthcare institutions in the country. “There is an urgent need for the white paper on the National Health Insurance [NHI] fund to be released,” said Craven.

“Government needs to indicate how far it is with the NHI pilot projects and when they will be expanded to all public health care institutions.” Cosatu said that while social grants played a important role, they were not sufficient to alleviate poverty. Only the creation of decent jobs would work.

Efficient Group economist Merina Willemse said Gordhan could allude to the possibility of a slightly lower than expected nominal growth estimate for this fiscal year.

“We expect that his real GDP [gross domestic product] estimate for this calendar year could only reach 2.0 percent versus the 2.7 percent stated in the February budget,” she said in a statement.

“It is likely that his GDP inflation projection could be significant, therefore propping up his nominal estimate to approximate the figure in the budget.” This could mean that there was no effect on his fiscal deficit to GDP estimate.

She said the slower economic growth environment could also account for weaker revenue estimates. On the expenditure side, there could be a chance of significant under-spending during the fiscal year, but this was not expected to feature in Wednesday’s speech.

“We believe the minister will focus on calming the nerves of the public and investors, while sending a confident message to rating agencies,” Willemse said.





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