The news that President Zuma has instructed the Minister of Finance, Malusi Gigaba, to trim expenses and increase revenue in order to find a solution to the R40 billion gap identified in the Medium-Term Budget Policy Statement is of major concern.
The statement released by the Presidency on Monday identifying the steps being taken to address economic problems after Standard & Poor lowered South Africa’s long term foreign and local currency debt ratings by one notch each to ‘BB’ and ‘BB+’ on Friday, might put cash strapped consumers under even more pressure.
Reports explain that the split will equate to cuts in expenditure amounting to about R25 billion and "revenue-enhancing" measures of about R15 billion.
Despite the obvious concerns of less money being spent in crucial areas like RDP housing, social assistance and other key economic and social focuses, I don't believe South Africans can be squeezed for more taxes. We are in a price pinch as it is, with rising costs, increased taxes, heightened unemployment and economic instability. To further aggravate the situation by trying to recover the shortfall by extracting more taxes from citizens, Government is counteracting growth.
Instead, Government should be developing plans that combat economic stagnation. They should be tougher on corruption and mismanaged funds, so that the money that is available in the fiscal reaches its intended target.
An environment not conducive to job creation and economic growth is what is propelling our economic vulnerability. Businesses, entrepreneurs and everyday citizens should have access to funding models, advisory boards, mentors, technology etc. that boost commercial activity in the areas where we need it most. There should be a push to gain access to markets through programmes that aim to transfer skills and development.
Hasty plans with concrete solutions are desperately needed to penetrate problem areas, and a fresh approach to accessing funds needs to occur instead of looking to citizens for money they don't have.
Harcourts Africa Chief Executive Officer