Finance Minister Pravin Gordhan will have to pull a rabbit out of a hat to keep state spending in check and to prevent a junk credit rating in what must be the most difficult Budget presentation of his career tomorrow.

In his Mini Budget presentation last year, Gordhan again reduced his three-year forecast for economic growth and revenue collection, after already doing so in February last year. The ratings agencies will keep a sharp eye on the minister’s Budget speech to see if he can deliver on government’s promises to lower the main budget deficit as promised in the Mini Budget.

It is widely expected that he will raise taxes to narrow the gap between spending and revenue, including a possible hike in VAT. Unfortunately, this would contribute to a decrease in workers’ expendable income and counter economic growth.

• UASA is calling on Gordhan to focus on measures that will accelerate the implementation of the nine-point plan as announced by Pres. Jacob Zuma in 2015, and specifically on the importance of the investment component of the nine-point plan which calls for the establishment of an investment of clearing house that will eliminate administrative impediments and provide greater policy clarity.
• UASA would like Gordhan to consider a lower tax burden for the manufacturing sector, as this sector has a high potential of job creation for young people and unskilled adults but one that investors currently find unattractive because of onerous tax obligations. Direct private investment could thus be encouraged.
• Many companies have Corporate Social Investment (CSI) programmes, albeit for the wrong reasons. Many of them do so as part of the numbers game to make the company look good. Unfortunately this kind of CSI programme does not add value and it does not make a sustainable difference. CSI programs should ideally be aimed at creating jobs and UASA calls on Gordhan to incentivise companies through tax concessions if they run CSI programmes that yield job creation and that fit in with government expenditure plans such as education and training.

Issued by UASA