ONKGOPOTSE JJ TABANE | It can’t be business as usual — time for new fiscal management ideas

The ANC’s insistence on increasing VAT while refusing to revise income tax brackets is a major political blunder that makes the party appear tone-deaf. Even if there are valid reasons for boosting revenue collection, the ANC has other levers of power it could use to avoid burdening the poor.

While the governminent may argue that most basic goods are zero-rated, political reality dictates that perception often outweighs technical justifications. What’s worse is the type of zero-rated foods that can only fuel the burden of disease.

There is a widespread perception that government waste is rampant — from an oversized cabinet to the number of provinces, an issue the DA has been uncharacteristically silent about. Despite various parties making so-called radical proposals, they have largely ignored these obvious cost-saving opportunities.

If the ANC were to take the lead on such reforms, it would likely face minimal political fallout. However, the government has failed to demonstrate a serious commitment to cutting waste. A few years ago, the president announced plans to reduce the size of the cabinet. Instead of fulfilling this promise, he expanded it — well, before the Government of National Unity (GNU) came into effect. Then after losing electoral ground, the ANC further bloated the cabinet for patronage reasons. It is unfathomable that, after securing only 39% of the vote, the ANC still holds most cabinet seats and has even increased the number of deputy ministers to accommodate a new government.

The obvious such as cutting down on the bloated civil service was not even hinted at. Instead the unaffordable increase of salaries was punted as if there is no crisis that all sectors of society must bear.

The current budget crisis presented a perfect opportunity to restructure government spending. A responsible approach would have been to call on all GNU partners to give up at least 25% of their cabinet seats, demonstrating a shared commitment to fiscal discipline. Yet such a move was never considered because it would directly affect the self-interest of politicians. It seems much easier to just tax the poor. It is sad that opposition parties have to lecture the liberation movement on such a basic strategy.

The same reluctance applies to the long-debated issue of reducing the number of provinces. A return to four key provinces could save billions overnight while streamlining governance. This would mean fewer provincial cabinet — cutting down on MEC salaries, security costs and administrative overheads. Senior government officials, many of whom could easily transition to the private sector, should not be clinging to an already overstretched public purse. However, political parties across the board avoid this discussion, as it threatens the patronage networks that have become deeply embedded in our political culture.

Some commentators have also proposed targeting Sector Education and Training Authorities (SETAs) to cut costs. While there’s no doubt SETAs have been plagued by mismanagement and abuse, scrapping them entirely would be counterproductive given the country’s massive skills deficit. With millions of young people neither in school nor university, the need for vocational training is greater than ever. Instead of elimination, SETAs require restructuring and stricter Treasury oversight — something that has been sorely lacking, as evidenced by the auditor-general’s repeated reports of financial mismanagement across government agencies. Of course those who have used the SETAs as a piggy bank are opposing this proposal for their own reasons. But at some point a bold decision on the SETAs must be made — there are just too many stories about corruption in that arena. 

Unfortunately, the finance minister’s recent budget did not introduce the kind of bold reforms needed to restore confidence that it will no longer be business as usual across the government. The obvious such as cutting down on the bloated civil service was not even hinted at. Instead the unaffordable increase of salaries was punted as if there is no crisis that all sectors of society must bear.

Furthermore, there is still no comprehensive strategy to support small businesses, which are crucial for economic growth. At the same time, the government has failed to rein in the taxi industry, a sector generating billions of rand while operating with little accountability. The ongoing lawlessness within this industry further erodes confidence in the state’s ability to enforce economic regulations.

Meanwhile, corporate South Africa seems to be shielded from any significant fiscal pain. In the world’s most unequal society, how is it justifiable that only the poor are being asked to shoulder additional tax burdens? Is it inconceivable to consider a corporate tax increase? And why are those who claim to defend the poor not advocating for businesses to share in the financial strain?

The government must go back to the drawing board. Taxing the poor should be a last resort, especially when billions of rand have been wasted through inefficiency and corruption. The people should not be made to pay for the sins of politicians.

• Prof JJ Tabane is the editor of Leadership magazine and a professor of media studies at the University of Botswana

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