Instead of generating R28 billion through tax increases to plug the hole in this year’s Budget, Finance Minister Pravin Gordhan should consider economic growth, selling assets and cutting wastage and expenditure.
The government should also have a comprehensive spending review over the next three financial years to review its expenditure and future priorities. This is the view of DA finance spokesperson David Maynier when he and his deputy Alf Lees shared the party’s “tax alternatives” at a briefing in Parliament yesterday.
“The minister, to his credit, warned that decisive action is needed to implement the structural reforms necessary to boost economic growth in South Africa. That is unlikely to happen,” Maynier said.
He said the government could raise significant revenue in the 2017/18 financial year if there was decisive action in growing the economy.
“An increase of 1 percent in gross domestic product could raise R18.2 billion in additional revenue if you assume a tax buoyancy rate of 1.34 percent.”
Maynier also said substantial revenue could be raised by selling assets in the state-owned entities as well as selling or leasing 13043 under-utilised land parcels and 1939 buildings under the control of the Public Works Department.
“This is in line with the presidential review committee on state-owned entities, which recommended more private sector investment in state-owned entities. To illustrate the potential of asset sales to raise revenue, consider the fact that the sale of government’s stake in Telkom alone could raise about R14.7 billion in 2017/18.”
Maynier also said more could be done to cut government spending and also eliminate irregular expenditure, which increased from R26 billion in 2014/15 to R46 billion the following financial year.