The IEJ submitted the following comments on the Revised Fiscal Framework and Revenue Proposals presented by the Minister of Finance on 30 October 2024. This submission highlights significant concerns regarding its alignment with key government priorities, including inclusive growth, poverty reduction, and economic transformation.
Concerns about the Revised Fiscal Framework
The IEJ expresses disappointment that the Revised Fiscal Framework fails to support the Government of National Unity’s (GNU) stated priorities, particularly in fostering inclusive growth and tackling inequality. The continued focus on debt stabilisation and budget cuts undercuts the ability to drive the socioeconomic transformation South Africa urgently needs. The fiscal strategy perpetuates austerity measures, which hinder economic growth and disproportionately affect the most vulnerable, exacerbating inequality.
Fiscal Strategy and Its Impact on Growth
While the MTBPS forecasts an increase in government spending, the growth rate is insufficient to keep pace with inflation and population growth, leading to a reduction in spending per citizen. This persistent austerity approach risks stifling job creation and public employment, vital for reducing South Africa’s record-high unemployment rate. The IEJ calls for a shift towards a development-focused budget that prioritises public investment in essential sectors such as healthcare, education, and social services.
Public Employment and Services
The failure to allocate sufficient funds to public employment and essential public services, particularly in health and education, demonstrates a lack of commitment to addressing the country’s structural challenges. The IEJ recommends that the Committee seek clarity on plans for expanding public employment programs, such as the Presidential Employment Stimulus, and that government prioritises funding for public services to ensure better service delivery and reduce poverty.
Revenue Proposals
The Revised Fiscal Framework does not adequately address the need to raise sufficient revenue for government programs. The IEJ recommends bold measures to raise revenue, including the removal of tax benefits for high earners, the introduction of a wealth tax, and a review of the Corporate Income Tax rate. These steps are crucial to ensure that the government has the financial resources needed to address pressing socio-economic issues.
Conclusion
The IEJ’s submission emphasises the need for a comprehensive fiscal policy that prioritises human rights, inclusive growth, and sustainable development. The Committee should hold the National Treasury accountable for aligning fiscal policy with the GNU’s objectives of reducing poverty, tackling inequality, and building a capable, ethical state.