by LUKE ZUNGA
JOHANNESBURG, (CAJ News) – NO African government has managed to grow the economy in a manner which benefits the majority of the citizens by any significant extent.
Some of the growth registered was merely climbing out of the lowest ebb of failure with marginal impact. Put the whole map of Africa on the table and point to countries with successful economies.
There is none!
For the African National Congress (ANC) to cling to 0.5% Value-Added Tax (VAT) increase is not about serious economic planning. Nobody benefits from this VAT gambit, not the poor citizens or the economy generally.
In fact, Value Added Tax is a regressive form of taxation which dampens capital formation. With reduced capital formation for black people, there is less investment necessary to grow the economy.
The ANC has been short on impactful economic designs ever since, and it cannot excel through this 0.5% VAT proposal either.
The real reason was that the ANC wants to present a picture that is not dictated to by the Democratic Alliance (DA), if it dropped VAT completely because the DA had protested. It is posturing and poor politics.
The economy cannot win with a divided nation and divided executive. The Minister of Finance Enoch Godongwana has failed to lead the nation in favour of petty politics of a half percent VAT.
The cluster of honeycomb politicians supporting the ANC will not create any new economic impact either.
The political fallout has far reaching consequences. It is only a fool who cannot see the dearth of African politics.
The Government of National Unity (GNU) carried the fibre of inclusivity and maintained a stable balanced public image where black and white participated and took each other seriously. The markets had factored that balance. Now it is no longer there.
Gwede Mantashe, the ANC Chairperson and Minister of Mines, said the DA played hard ball. It is not the DA who played THE hard ball.
It is the ANC, which played hard ball, for refusing to scrap something which is actually of no laudable financial outlook.
The ANC realized that its association with the DA weakened its electoral image and used this budget constellation to elbow the DA out.
The DA made a calculated error from the beginning, by working with and supporting the ANC to form a coalition government.
The ANC invited other honeycomb political parties to make it look like a genuine Government of National Unity.
Before the May 2024 elections there was a coalition of about ten political parties, who signed a Multiparty Charter on 23 July 2023 at Kempton Park, to oust the ANC out of power.
The Multiparty Charter was made up of Democratic Alliance, Action SA, Inkatha Freedom Party (IFP), Freedom Front Plus (FF Plus), Independent South African National Civic Organisation (ISANCO), Spectrum National Party (SNP), African Christian Democratic Party (ACDP), United Democratic Movement (UDM), Built One South Africa (BOSA), among others.
The ANC, after dropping to 40.98% in the national election results, quickly engaged the DA to form a government with.
This engagement was supported by big business who wielded a heavy hand behind the DA leader, John Steenhuisen and the DA Federal Chair Helen Zille, to enter into marriage with the ANC, dropping the other members of the Multi Party Coalition and catching them by surprise.
Multiparty members had to reconsider their roles, such as the Action SA which painfully manoeuvred with the ANC to force the Tshwane Mayor out. That crusade has reached the budget policy statement.
Many criticise the director-general (DG) system of running government. As author of this article my team of researchers has been to the Treasury many times (we kept a record) but the Minister is not aware until the DG advises him.
Throughout the year citizens submit economic suggestions which the DG does not consider.
During budget times a small window is opened for that time only with a few ideas picked.
This is where the failure of the state rests. The Minister only knows what the small group of people around him want him to know. A half percent VAT increase may not yield what the Minister expects.
There are many suggestions which would boost the economy but are ignored. It is the duty of the Department of Trade, Industry and Competition (the dtic) to build that tax paying capacity for the South African Revenue Service (SARS) to tap into. SARS collection methods destroy that upcoming growth capacity.
Having been in accounting practice for 30 years, we are aware that 90% of businesses have problems with SARS, through huge unreasonable assessments which bear no relevance to the business and which disrupt economic growth as objections take long to be attended to.
Dealing with SARS is an excessively expensive area of interaction.
– CAJ News