Cut the fat, don’t tax the poor

6 March 2018

Fellow South Africans

We have come here today to say: we reject the increase in VAT to 15%. We reject it outright.

We reject this government’s plans to make up for their waste and their greed by taxing the poor even more.

We reject the argument that the only way to dig us out of our financial hole is by making poor South Africans pay through a higher VAT rate and higher fuel taxes.

We reject any solution that says “make the people who already can’t afford the basics, pay even more so that we can keep on looking after loyal cadres”.

Because that’s exactly what this VAT increase, along with the 52 cents per litre hike in the fuel levy, will do. It will target the people who spend by far the biggest part of their income on food and transport.

It will target the poor while the real reasons for the R50bn hole in our budget – the wasteful spending, the populist policies and our massively bloated government – remain off-limits to the Finance Minister.

And remember, that R50bn hole is projected to become a R70bn hole next year, and a R90bn hole the year after that.

So what are we going to do? Are we going to push up VAT every time we can’t balance the books?

To those who say a VAT increase was the only way to make up the shortfall, I say: Rubbish! You haven’t even tried to look for ways to save enough.

I know this, because we have looked and we have found a way to save the money and prevent the VAT increase, without hurting the poor and without putting our country deeper into debt. It absolutely can be done.

But it can only be done if you are prepared to make decisions that put the interests of poor South Africans above the interests of those who earn a living off one of the world’s most bloated governments.

The answer lies in trimming the fat – in cutting spending where we can afford it and, very importantly, where it won’t hurt service delivery.

The bitter irony of the ANC government’s budget is that the only significant cuts in spending were all made in areas that directly affect poor communities.

By slashing the funding to provinces and municipalities for school infrastructure projects and human settlements programmes, and by cutting 2000 personnel from the police service, it is only the poorest communities who will pay.

So if not through a VAT hike and cuts in pro-poor spending, where should the former Finance Minister have found the missing money?

Well, we gave him the answer to this question. We told him before his Budget Speech, and again in the wake of his disastrous budget, where he could find R112bn that would not punish poor South Africans.

We have one of the largest cabinets in the world, and we have just about the most foreign missions in the world. Why? Because that’s how the ANC rewards cadres. Ministers, Deputy Ministers, Ambassadors and all the other positions created by this enormous government – these are all part of an elaborate loyalty reward scheme.

The fact is, we don’t need half of them. We can start by firing the leftover Gupta Ministers that the President failed to fire, like Malusi Gigaba and Bathabile Dlamini. We can trim our cabinet down to 15 ministries and we can cut our foreign missions by 69. That alone will save us close on R18bn.

Then we need to have a serious look at our public sector wage bill. By implementing a one-year wage freeze for public service office bearers, including local and general government employees, and by forgoing performance bonuses in government, we can save over R60bn.

We can save a further R17bn over the medium term by withdrawing from the New Development Bank.

And finally, we need to take stock of our SOEs and the parcels of government land that aren’t suitable for housing development. Whatever is not strategic and whatever we don’t need, we must sell off or lease out.

There is R112bn to be saved in our budget, but it requires a shift in thinking. It requires taking on the patronage system on which the ANC was built.

Fellow South Africans, we have been hearing a lot recently about a new dawn. We have a new President who has made all sorts of promises about doing things differently. That’s good. But the time for promises has come and gone.

I hope President Ramaphosa enjoyed his honeymoon, because it is over. He is back at work now and he needs to start acting on all his promises.

But he’s not the only new member of this government. We also have a new Finance Minister, who brings with him high expectations. I am sure he’s glad to have this opportunity to prove himself.

Minister Nene, you’ll never have a better chance to make an impression than with your first big decision in cabinet. You know the facts around this budget and the VAT hike, and you know what you can do to fix it.

I call on you, on behalf of millions of poor South Africans, to reverse this VAT increase, and to find the necessary money in the budget items we have outlined for you.

The question is not whether it can be done. We have shown that the money is there. The question is whether you and President Ramaphosa and your colleagues in this “New Dawn” government have the courage and the will to do the right thing.

The ball is now in your court.

Thank you.

Issued by Mmusi Maimane, Leader of the Democratic Alliance, 6 March 2018