GNU parties on why they support budget

Parties in the government of national unity have criticised other parties for voting against the budget, saying they overly focused on the 0.5 percentage point in value-added tax (VAT) in making their decision. 

IFP, Rise Mzansi and the PAC this week told TimesLIVE that though they were also not happy with the VAT increase, it was only a part of the budget that included a lot of other elements. 

They argued that it was wrong for the parties in parliament to vote against a R2.6-trillion budget that was pro-poor over the 0.5% VAT increase. 

Rise Mzansi leader Songezo Zibi said some MPs had the option to reduce the total budget if they did not want the National Treasury to raise taxes or borrow more. 

By virtue of approving expenditure and keeping the borrowing limit, they left the National Treasury with little room to manoeuvre. 

He said that parliament had voted to keep the size of the budget as proposed by the finance minister at R2.59-trillion and had also endorsed the borrowing levels as well as the proposed borrowing limit, which only left them with generating revenue raising VAT.

“You cannot complain about tax if you are not willing to comment on borrowing and the size of the budget. The three always go together,” said Zibi. 

“That none of them have commented on the other two tells you how much they know, how little they know or how dishonest all of them are.”

He said that the MPs had failed to have a conversation about this. 

“You can’t say I don’t want VAT [increase], but you don’t move on the other side. If you don’t like VAT, tell the treasury to borrow another R30bn rather because you are going to have a shortfall. That’s what people with brain cells do. But they don’t do it,” said Zibi. 

“So, this whole conversation is a stupid conversation because we’re talking about one leg in a three-legged pot, and you are saying cut off the one leg, but I want the pot to remain steady. That’s what everybody is doing.”

He said MPs had been fixated on VAT too much, forgetting that it was going to have a minimal impact on the consumer.

“I’m not justifying VAT, but I sat down with the DG of the National Treasury before the budget,” he said. 

“If you buy groceries of R5,303 using the basket of goods that is considered essential — mealie meal, bread, sugar, sanitary pads — the total VAT increase on that basket is going to be R11. So, if the VAT had been one percentage point that would have been R22.”

The impact of having rejected the one percentage point VAT would now be felt by taxpayers. 

IFP’s Mkhuleko Hlengwa echoed these sentiments, saying the budget in its totality was pro-poor, which is why his party had voted for it. 

“What is also important is that this is not a VAT budget. The VAT element is one element of a broader budget. So, what would be naive is to reduce it to VAT,” he said. 

“And why this is, is because we have got tough compromises and tough choices that we have to make. We are trying to get 11,000 teachers into the system, we are trying to get 800 doctors into the system. Additional funding for early childhood development, the expenditure on infrastructure, transport and logistics. And all these things are job drivers.”

He said that to further protect the poor against the impact of VAT, the zero-rated food basket had been expanded and that the fuel levy was also not increased. 

“So, the budget has to be viewed in its totality and not one element. And I’m yet to hear one party placing an alternative on spending and prioritisation for revenue generation about VAT,” he said. 

Hlengwa said the budget had sought to “tamper justice with mercy” in that while there was a VAT increase on one side, there were measures in place to protect the poor. 

PAC’s Mzwanele Nyhontso said a mistake was being made of reducing the budget to just the VAT. 

“My point is that this budget cannot be reduced to VAT. We voted for the whole budget not for VAT,” said Nyhontso. 

“Everybody, even those outside the GNU, were saying they can support the budget with the VAT if the DA can make way for them in government. This means everyone wants to support the budget but is wanting to table conditions for their entry to government, which is not fair.”