tito mboweni budget speech 2021 reaction da EFF

Finance Minister Tito Mboweni. Photo: Twitter/Parliament of RSA

Budget 2021: Tito Mboweni’s economic strategy slammed by rival parties

The DA, EFF, and the Freedom Front Plus have all offered their thoughts on Wednesday’s budget speech. SPOILER: They’re not happy.

tito mboweni budget speech 2021 reaction da EFF

Finance Minister Tito Mboweni. Photo: Twitter/Parliament of RSA

Finance Minister Tito Mboweni delivers the 2021 Budget Speech to MP’s and President Cyril Ramaphosa on Wednesday 24 February, and announced several measures that National Treasury and the South African Revenue Service (SARS) have determined will most productively alleviate the country from economic turmoil. 

Among the features of the economic strategy was an increase to personal income tax, as well as excise duty hikes for the alcohol and tobacco industry, as well as increasing the national fuel levy. He also announced that the government wage will will be reduced, and that much of the funds that would have been invested into these projects will now be distributed to social grant beneficiaries and vaccine procurement programmes. 

Opposition parties have been reacting to the budget since it was delivered earlier this afternoon, and have raised concern with a variety of its fundamental strategies. 

Personal income tax increases welcomed  

The DA’s Shadow Minister of Finance, Geordin Hill-Lewis, said that while Mboweni’s commitment to getting the country’s debt under control by 2025 and cutting the government wage bill by a massive R300 billion are welcome, there remain glaring problems with government’s vision to stabilise SA”s economy. 

“We are pleased Minister Tito Mboweni stuck to these targets,” he said. “However, the credibility of these targets is questionable. The targets are based purely on the government’s ability to actually deliver the wage cuts they have now budgeted for. This sets up a major conflict between the ANC and public sector unions, which if lost, will result in a major fiscal and debt blowout.

These were not the issues that resulted in the opposition party taking immense umbrage over Mboweni’s budget, though.

“This was a Budget that will raise the cost of living for those South Africans who face the hardest times. It is a budget that kicks South Africans while they’re down,” he said. 

“As unemployment has spiked to above 42.6%, South Africans who have lost their jobs, as well as the elderly and those living on social grants, will wonder what they have done to deserve this.”

DA slam ‘tax con’ budget, suggest measures will hurt the poor 

Hill-Lewis listed the following as the primary shortcomings in the 2021 budget: 

  1. Fuel levy hike: “Minister Mboweni said he wouldn’t increase taxes. Then he increased petrol tax by 27 cents a litre. This was a tax con. This will increase the cost of living for every South African. Taxi and bus fares will go up, as will food prices, as goods will cost more to move around the country. This is a regressive move that burdens the poor (who spend more of their income on food and transport) unfairly,” he said. 
  1. More bailouts for failing State-Owned Enterprises (SEOs): “The Minister announced yet another immoral bailout for SAA of R4.3 billion, an enormous R31.7 billion for Eskom, and R7 billion for the Land Bank. Each year these bailouts are repeated, and each year the government promises they will end,” he said.

    “The truth is that there is no plan to end them, and they will not end until these zombie state companies are broken up, sold off, or shut down. The ANC is now cutting social grants by R5.8 billion to bail out SAA again with R4.3 billion. The trade off is direct, and is paid for by the poorest and most vulnerable in our society.”
  2. Vaccine rollout delays: “The funding for the vaccine rollout is totally inadequate. This is the most obvious and basic thing the Minister had to get right today – provide enough money for a vaccine for every person,” he said.

    “This is not just the right thing to do to save lives, but is the best economic recovery strategy the government could hope for. It is clear the government is planning on a 3 year vaccine rollout. This is too slow, too little, too late.”
  3. Spiralling debt: “Finally, despite all of these commitments, government will still borrow R541 billion more this year. Over the next 3 years, the government will spend nearly R1 trillion just on paying interest on debt. This means that this year government will pay roughly the same in interest on debt (R278.3 billion) as it spends on all the other goods and services (R279.5 billion). 

“This was not a budget to be proud of. It placed the burden on the poor,” Hill-Lewis concluded. 

EFF bemoan failure of transformation measures in 2021 Budget

The Economic Freedom Fighter’s (EFF’s) Mbuyiseni Ndlozi said that the budget wholly ignored the critical need for South Africa to prioritise transformation and industrialisation, and suggested that it falls short of it’s responsibility to address major social issues that are currently plaguing the country’s most vulnerable. 

“There is nothing in this budget that is going to result in the transformation of the structure of SA”s economy. What is the structure of South Africa’s economy? Chronic unemployment, the fact that we do not as a country have industrialisation happening… even the promises that they will drive government expenditure that will stimulate local industrialisation and production – they have been making these promises over the years yet they are not materialising,” he said. 

Ndlozi took aim at Mboweni’s decision to ensure that tobacco and alcohol producers are increasingly taxed while other major industries were able to avoid the austerity measures. 

“There were fundamental problems that relate to illicit financial flaws that the budget said nothing about. I mean – you collect taxes from the insignificant tobacco industry and leave out the big mines and auditing firms,” he said, adding that government seem intent on introducing measures that would return the economy to a “pre-COVID-19 situation, which is totally unattainable.”

“Corporate income tax was ignored – they should have gone for those guys and collect more taxes from them, but to redirect these taxes to the type of economic activities and government expenditure that will lead to industrialisation and the production activities that need to happen locally in the country,” he said. 

‘Government debt is out of control’ – FF Plus 

Freedom Front Plus (FF Plus) leader Pieter Groenewald said that while increases to personal income tax are welcomed, the budget nonetheless sought to bestow further financial burdens on SA’s households.

“The FF Plus welcome the fact that there is an increase in personal income tax, although there is a fuel levy increase that will have a negative impact on the cost of living,” he said. 

Groenewald said the “really disturbing” aspect of the budget is the degree of debt  South Africa is currently faced with. 

“At this moment we have about R3.95 trillion in debt, which the service cost alone is 270 billion annually, and over the medium term this will increase to bout R340 billion annually,” he said. 

“Government debt is out of control. If the government was a company, they would have been liquidated long ago.”