SABC News - Pressure on Pravin Gordhan to avert downgrade:Tuesday 23 February 2016

Pressure on Pravin Gordhan to avert downgrade

Tuesday 23 February 2016 21:49


Finance Minister, Pravin Gordhan, is expected to announce severe cuts to state expenditure.

Finance Minister Pravin Gordhan is expected to announce severe cuts to State expenditure.(GCIS)

Finance Minister Pravin Gordhan will on Wednesday deliver what is widely seen as the most difficult budget since 1994.
Gordhan is under pressure to pull a hare out of the hat, which will avert the real danger of South Africa being downgraded to junk status.

The minister is expected to announce severe cuts to State expenditure and may raise taxes to decrease the balance of payments.

After meeting with Gordhan ahead of the budget, President Jacob Zuma said the budget to be presented was good for the country and the economy.

The DA says it is opposed to any possible tax increases which may be announced by Finance Minister Pravin Gordhan on Wednesday when he tables his budget in Parliament. The party says instead of increasing taxes, revenue should be raised by selling off non- strategic State assets which could bring in billions of rand to the coffers.

The DA says the Finance Minister will have to perform a delicate balancing act when he presents his budget. The party says Gordhan has five budgetary challenges. They are reducing unemployment, averting a ratings downgrade, providing relief to poor households, addressing tertiary student fees and providing drought relief for the farming community.

Despite this difficult task facing the Finance Minister, the DA doesn't believe in further increases of taxes to raise revenue.

Deputy Spokesperson on Finance, Alf Lees, says government should rather sell off non-strategic assets.

“There should be no increases in tax at all and that obviously includes VAT.”

The ACDP also says it is against any possible increase in personal tax

The party says the cost containment measures are important and are the right fiscal signals. It, however, says they are largely a fiscal spin, to cover failure to deal with big fiscal risks.

The DA's Spokesperson on Finance, David Maynier, explains, “A good place to start cutting spending would be on President Jacob Zuma’s bloated Cabinet, which could be reduced to 15 ministries saving approximately R4.7 billion per year.”

The ACDP also says it is against any possible increase in personal tax. The party says consumers are already hard pressed.

Steve Swart of the ACDP says, “We would rather see government expenditure being cut and the R30 billion … that is estimated to the R30 billion for fraud, corruption and wasteful expenditure to be addressed and collected. If we cut government expenditure enough then it won't be necessary to increase personal taxes.”

The ANC says it will leave it up to the Finance Minister to decide the issue of possible tax increases. Caucus Spokesperson, Moloto Mothapo, says they expect Gordhan to put emphasis on tertiary student funding and unveil cost cutting measures.

Analysts say this week's budget is all about credibility.

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