|THE NATIONAL ASSEMBLY DEBATE: APPROPRIATION BILL ADDRESS BY UDM MEMBER OF PARLIAMENT (15 March 2005)|
Madam Speaker, Honourable Minister and Honourable Members -
It seems that the Hon. Minister of Finance has presented this House with two budgets. The one is a well-crafted speech, eloquently delivered by a competent Minister and then packaged and sold by ranks of spin doctors. One might call it the PR budget. The other budget speaks, much less eloquently but much more urgently. It speaks from the real hard figures that are tabled with the PR budget. One might call this the silent but real budget. I shall confine myself to dealing with the latter.
The PR budget talks of increases in Social Grants and Pensions, but the real figures show the increases that filter through to the elderly and the disabled barely keep up with inflation: they receive no real increase. They languish in poverty while awaiting the pleasure of the Minister.
The PR budget has been widely hailed as being pro-poor, but the silent reality is that the poor remain in abject poverty; and the budget announcements about inflation-linked increases in Social Grants and Pensions will not change that fact. When I confronted the Hon. Minister with this in committee, his response was that Social Grants and Pensions cannot exceed minimum wage levels for fear of discouraging people to look for employment. This argument is a big fat red herring.
The UDM has never suggested that Social Grants should replace income, nor that poverty can or should be alleviated through social grants. That would be ludicrous. Pensions and disability grants should be adequate to allow a person to live with dignity above the poverty line, or does the Hon. Minister wish to force the elderly back to work – seeking jobs in competition with the young? Should the disabled start up their own businesses or join the queues of able-bodied work seekers who themselves cannot find jobs?
The elderly and the disabled should not be forced to seek employment. Pensions and Social Grants are provided on the grounds of means testing, and these people cannot forever be consigned to abject poverty on the grounds that they should rather be searching for employment! Disability Grants and Pensions are not about replacing employment temporarily, they are about alleviating poverty. It is disingenuous to fail to make that distinction.
The PR budget is hailed for putting money into taxpayer’s pockets. The silent budget confirms this, but it reveals the bitter truth that while those who are employed and who earn enough to pay income taxes are given a real after inflation increase in their income. But those millions who are in real need, those who have nothing - get nothing: so much for Government’s commitment to eradicate poverty.
But the silent budget also reveals that, despite tax cuts, the individual taxpayer still carries the tax can. Personal Income tax is still the greatest single source of state revenue: it virtually doubled during the 9 years to 2004. Individuals’ income tax amount to 32.56% of total state revenue from all sources and when VAT paid by individuals is included, this percentage will be much greater. As against that, companies pay only 20.13% of total revenue, also excluding VAT.
When I faced the Minister with these facts in Committee and then argued the necessity to shift the tax burden, the Hon. Minister claimed that the volatility of revenue streams from company income tax was too great for him to rely on increasingly. I therefore tested the Minister’s hypothesis using figures he published in reply to my questions, for which I thank him.
One expects the volatility of tax revenue streams to be slightly higher than that of the estimates which calls them forth. Thus it is no surprise that Personal Income Tax shows volatility of 5.51% against the 5.48% volatility of the estimates. Similarly, VAT shows volatility of only 2.04% against the 2.68% volatility of the total estimates.
But company tax shows volatility of 16.63%, which is overshadowed by the incredible 21.61% volatility of the estimates. This indicates a serious flaw in the budgeting process. It probably also indicates that the volatility problem originates more in the Minister’s department than in the revenue streams of companies. It is a matter that requires immediate attention, especially since it appears to be the one factor inhibiting a shift of the tax-burden away from households to firms.
But the poor will not see an improvement in their lives as a result of this budget. The poor are beyond income tax relief, but they do pay taxes such as VAT, they are affected by other taxes, such as fuel levies when they travel. So the second economy is burdened with tax, but receives no relief, no reprieve and so the gap widens…
This budget is a sound first world budget. Any finance minister of any G7 Nation could be justly proud of it. But first world solutions will not save our second economy, nor will it be saved by improvements in the first economy. It will only develop by the growth of State enterprises and new strategic industries - enterprises not primarily driven by profit, but by beneficiation, service and employment. We want to see a budget that gives the founding of new strategic industries the highest priority. Now is the time to think out of the box.
We will not achieve what we have to achieve for the people of South Africa by sticking to the budget mantras of the first world. Our circumstances and our needs are vastly different. We need new ways of thinking: new visions and new vistas. We do not need more of the Saville Row type budgets. Our budgets should be cast in a new mould – an African mould: A budget from Africa, by Africans for Africans.