HOSPERSA CRITICAL OF FAILURE TO CUT COSTS IN BUDGET
23 February 2017
The Health and Other Service Personnel Trade Union of South Africa (Hospersa) is critical of the little focus given to measures for combating irregular spending in Government. While the Union welcomes the safety afforded to the working class during these tough economic times, the overemphasis on increasing income and failure to curb government inefficiencies is seen as a cause for concern.
In his budget speech delivered in National Assembly yesterday Finance Minister Pravin Gordhan provided much-welcomed relief to the working class by firstly dispelling rumours of a Value-Added Tax (VAT) increase as many pundits predicted.
“We are very relieved that the increase in VAT did not surface,” said Hospersa General Secretary Noel Desfontaines. “VAT is a regressive form of tax which promotes the scourge of inequality in our country, and one must be very careful when making such adjustments when we need to focus on the core issues of poverty, inequality and unemployment,” he said.
Instead, the Minister proposed tax increases for those with taxable income of more than R1,5 million per year, saying that “those who earn more, should pay more”. Lower earners from the working class will also benefit from the proposed increase in the tax-free threshold from R75 000 to R75 750. The budget also provided relief in the affordable housing market through an increase in the threshold above which transfer duty is paid from R750 000 to R900 000. Other good points for the working class also include an increase in the annual allowance tax free savings accounts to R33 000.
“We applaud the Minister for protecting the vulnerable low-earning workers of our country,” said Desfontaines. “It is important to remember that the ladder to economic freedom is often most difficult to climb at the bottom rungs, and we need to make it easier for more people to get to the top,” he said.
The speech also included an announcement that government is ready for the next phase in the implementation of National Health Insurance (NHI). The Minister emphasised government’s commitment towards NHI as enshrined in the National Development Plan (NDP).
“While Hospersa is on record that we are in total support of the notion of universally accessible healthcare in South Africa, we remain concerned about the current capacity and levels of service delivery in public health,” said Desfontaines. “Government must first get the basics right before jumping into major national projects such as the NHI. Our country’s public health system has many structural challenges like staff shortages and lacking capacity at many levels, and this is made worse by poor management and corruption. The implementation of NHI without the Department [of Health] first getting its house in order, will be disastrous and our people will suffer,” he added.
At the core of the budget speech was an attempt to address the R28 billion projected shortfall for the year and, like with any budget shortfall, one can either increase income or cut costs. The Minister chose to do the former, by focusing on various ways to funnel more money into the state’s coffers. Apart from the increase of Personal Income Tax (PIT) of 45% on those who earn more than R1,5 million per year, the tax on dividends – on which many pensioners are dependent – was increased from 15% to 20%. The fuel levy, which has numerous knock-on effects on transport, food and general retail costs, was increased with 30c per litre and the Road Accident Fund (RAF) levy will increase with 9c per litre. The increase in fuel costs therefore totals 39c per litre on 5 April 2017. The so-called sin taxes on alcohol and tobacco were also increased substantially.
The elephant in the room, however, was that of cutting costs. Even though the Auditor-General, Mr Kimi Makwetu last year reported that irregular expenditure at local government level increased by more than 100%, this matter was not mentioned in the speech. The many cities and towns experiencing challenges with basic services like electricity, water and refuse removal, were not covered, and neither was the combined effect of poor management and lacking oversight that have become endemic to the public sector in general.
“We bemoan the fact that government is failing to recognise and address its own failures,” said Desfontaines. “Just like the President [Jacob Zuma] in his State of the Nation Address, the Minister neglected focusing on ways to curb the causes of wasteful expenditure. One feels that only increasing taxes and not looking at becoming more efficient with the taxes taken from the people, is a strategy that will come back to haunt us in future,” warned Desfontaines. “Hospersa again calls on government to urgently address the poor management and corruption in public services. Our people deserve value for their money, and public services should provide for the basic needs of everybody,” Desfontaines concluded.
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For interviews please contact Hospersa General Secretary Noel Desfontaines – 083-321-4427.
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