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DA proposes spending review

DA proposes spending review

20th February 2017

By: African News Agency

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The Democratic Alliance (DA) on Monday proposed a comprehensive spending review as it previewed Finance Minister Pravin Gordhan’s budget speech to be delivered on Wednesday.

The spending review, the country’s largest opposition party said, would include National Treasury, national departments, provinces, municipalities and state-owned companies and require that government’s spending structure be analysed “with a view to re-prioritising expenditure over the medium term between 2017/18 and 2019/20”.

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The DA predicted economic growth to be revised downwards from the 1.3 percent forecast last year to 1.1 percent.

Given the tight fiscal space Gordhan has to manoeuvre in, the DA expected him to announce tax increases.

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“We expect the minister to either raise the personal income tax rate by about 1%; provide limited or no relief for ‘fiscal drag’, which could raise between R7-billion and R13-billion; or create a new upper tax bracket, and a higher marginal tax rate of say 43%, for individuals earning a taxable income of more than R1.5-million per year, which could raise about R5-billion in 2017/18.”

The DA said it was also concerned of the risk posed by state-owned entities that received government guarantees worth R469-billion.

“Additional spending pressures loom in the form of the public sector wage bill, post-school education and national health insurance.”

The DA cited the recent announcement that former Eskom group chief executive Brian Molefe, believed in some circles that he is being groomed as Finance Minister Pravin Gordhan’s successor, would be sworn in as a member of Parliament as perilous to the South African economy.

“The bottom line is that appointing Brian Molefe to any position in the ‘finance family’ would be a clear-and-present danger to the institutional independence of National Treasury and the Public Investment Corporation, and it would be bad for South Africa.”

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