Finance Minister Enoch Godongwana faces a daunting task as he prepares to deliver his first budget under the Government of National Unity (GNU). Opposition groups fiercely oppose any tax increases, adding pressure to an already complex economic landscape.
Finance Minister Enoch Godongwana faces a challenging task as he prepares to deliver his first budget under the Government of National Unity (GNU) on Wednesday. The political landscape is fraught with pressure from various opposition groups vehemently against any tax increases. Godongwana's announcement comes amidst a turbulent global economic climate, characterized by the US President Donald Trump 's executive order freezing funding from the President's Emergency Plan for AIDS Relief.
This adds another layer of complexity to the already precarious situation, which was further exacerbated by the medium-term budget policy statement's projection of a budget deficit and a revised spending reduction of R21 billion late last year.Economists warn of a dire fiscal account, with rising national debt reaching dangerously high levels. Compounding these challenges are the mounting demands placed upon Godongwana by State Owned Enterprises, struggling municipalities, civil servants seeking salary increases, and millions of citizens reliant on state income. The looming question is whether Godongwana will opt to cut state spending, a politically sensitive move likely to face strong resistance.While acknowledging the dire economic straits, some anticipate potential tax increases, particularly on sin taxes and the fuel levy. There are also speculations about the zero-rating of certain items to provide some relief to consumers. Economists predict a modest economic growth rate, likely not exceeding 1.5%, a figure that falls short of the President's projected 3%. The DA has called for a budget that prioritizes economic reforms, infrastructure investment, and job creation within the private sector. They also stress the need to address the cost of living crisis through fuel levy reforms and expanding the zero-rated VAT basket to alleviate the burden on low-income earners. Cosatu, on the other hand, demands a bold and progressive budget that strengthens the state's capacity to deliver services and stimulate growth. They vehemently oppose any tax increases on the working class, particularly VAT or personal income tax hikes, arguing that such measures would exacerbate inflation and hinder economic recovery. They advocate for increased investment in SARS to tackle tax evasion and customs fraud as a means to secure revenue. The GOOD Party emphasizes the need for difficult choices to address unemployment, inequality, and poverty, urging the government to prioritize access to essential services like clean water, affordable housing, and improved public transportation infrastructure. The SACP anticipates the budget to advance the National Health Insurance rollout and make tangible progress towards a comprehensive social security system, including the introduction of a universal basic income grant. ActionSA and Build One South Africa, both opposed to tax increases, demand government accountability and transparency, calling for reductions in state luxuries and a crackdown on corruption and mismanagement before considering any tax burden on citizens
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