Economic growth the problem, not VAT – Maimane
As Finance Minister Enoch Godongwana prepares to re-table the budget speech on Wednesday, Mmusi Maimane, Chairperson of the Standing Committee on Appropriations, warned that the focus should be on fostering economic growth, not increasing VAT.
Godongwana’s budget speech, initially scheduled for last month, was postponed due to a dispute among GNU partners over a proposed 2% VAT increase.
During Monday’s Finance Cluster media briefing, Maimane stressed that the country's primary challenge is not VAT but the lack of growth, which has averaged only 1% over the past decade.
“Our first problem is not VAT, as many might say; our first problem is growth,” Maimane stated.
He also highlighted the need for urgent structural reforms in the medium-term budget, particularly in areas like railways, electricity, and water.
“The reality is, you cannot sustain low growth levels in a global geopolitical climate with suppressed growth and continue hoping for adjustments in the budget to keep the country sustainable,” Maimane said. “We must focus on growth.”
The finance cluster reaffirmed its responsibility for oversight and accountability, with efficient public fund management taking centre stage at the briefing.
Songezo Zibi, from the Standing Committee on Public Accounts, pointed out that despite following due process, misuse of public funds remains a recurring issue, with the Treasury frequently stepping in to resolve the problem.
“There are things we refuse to address in government spending culture, which means we constantly ask the finance minister to find more money for inefficient spending, and when he fails, we become unhappy, yet we continue to waste funds,” Zibi said.
He stressed that Parliament must focus not only on material irregularities but also on the efficiency of public spending. Zibi also suggested that the R60 billion budget shortfall could be covered without raising taxes, arguing that excessive borrowing and poor spending practices are the real problems.
He called for a serious conversation about measures to reduce financial losses and save more money.
“In 2014/15, government debt was R1.79 trillion. By 2023/24, it had ballooned to R5.26 trillion. We’ve borrowed an additional R2.6 trillion to R2.7 trillion, yet we have nothing to show for it,” Zibi concluded.
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