26 February 2014

South Africa: Cosatu Statement On 2014 Budget Speech

press release

The Congress of South African Trade Unions (COSATU) takes note of the 2014 budget speech delivered by the Minister of Finance, Comrade Pravin Gordhan.

COSATU accepts, as the Minister has said, that South Africa has been affected by the sweeping and devastating global economic crisis that struck every country throughout the world in 2008 and led to a collapse in commodity prices, sharp declines in international

trade and a crisis in financial markets.

However, through necessary intervention by the state, we have been able to progressively come out of this crisis albeit slowly.

With this in mind, there are a number of positive things in the budget speech that COSATU supports. But the Minister also missed an opportunity to announce plans to implement some of the promises made in the ANC elections manifesto as well as commitments made by the President in the State of the Nation Address.

We welcome an increase in the overall budget despite the constraints government faces due to the slow domestic, and global, economic growth. We particularly welcome an increase in the infrastructure budget by R847 billion over a period of three years. This will go a long way in catalysing economic growth and job creation.

We call on government to heed the call made by the President of the Republic in the State of the Nation Address that local content should be increased to 75% over time. The infrastructure development programme should help in strengthening local industries by increasing local content of the infrastructure development projects.

We welcome increases in social grants which will go a long way to help many of our people to access basic food and services. We are however disappointed that the increases are barely above the inflation rate.

We congratulate government for its successful removal of one million invalid beneficiaries from the social grant system and call for stern action to recover money received illegally.

COSATU applauds the setting up of a Tax Committee to review the tax system. COSATU has called for the following to ensure that the tax system is progressive and provides the state with the necessary resources to transform the economy and provide basic services to the majority of our people and continues to call for:

- Introduction of a more progressive tax system, a tax category of the ‘super rich';

- Introduction of a solidarity tax, whose aim is to cap the growth of earnings of the top 10% and to accelerate the earnings of the bottom 10%;

- Introduction of tax on both domestically produced and imported luxury items, but a higher tax on luxury items which are imported;

- Imposition of a land tax to aid the process of land redistribution;

- Introduction of export taxes on strategic minerals, metals and other resources to support downstream industries and to promote value-addition;

- Introduction of investment tax credits to encourage local procurement of machinery and equipment;

- Introduce a tax on financial transactions, including capital gains tax above a certain minimum threshold, to limit short-term capital flows and to encourage productive investment, and speed bumps on short-term capital flows to discourage hot money

- Introduction of tax on firms that are stubborn in closing the wage gap;

- Taxation of firms that pay below the statutory minimum wage, and the distribution of such tax proceeds back to the workers concerned;

We are disappointed that the Minister has not announced the introduction of capital controls which have been dismantled over a period of time and that has resulted in outflow of capital which is affecting the economy negatively.

While we welcomed the Minster's announcement that there will be an increase in infrastructure spending, we are surprised that the road infrastructure has not been specifically mentioned. We had expected the Minister to make a bold announcement on the funding of the road infrastructure in the light of the failure of the unjust e-tolling system. The Minister has announced an increase in fuel levy and we repeat our call to move away from the iniquitous ‘user-pays' principle to fund the road infrastructure, which is a basic public service and not a commodity.

We had also expected the Minister to announce steps to implement the legislated minimum wage as promised in the ANC elections manifesto.

We welcome increased spending in education and health. However, we had expected the Minister allocate more towards the reopening of the nursing and teachers colleges. The improvement of quality public health and education depends on in part on narrowing the nurse-patient and teacher-learner ratios respectively.

COSATU is disappointed that the Minister failed to announce measures within the fiscal policy to implement the ANC resolution on land reform and restitution and the commitment in the State of the Nation Address to move away from the willing-buyer/willing-seller principle to a just and equitable principle. We however welcome increased support to the subsistence and smallholder farmers.

COSATU repeats its support for the establishment of the Chief Procurement Office to ensure that government gets value for money and address the problem of government employees who do business with the state.

We welcome the proposals for the extension of unemployment benefits from 238 to 365 days. We call on government to speedily address the practical issues on this matter and ensure implementation without any delays.

Patrick Craven (National Spokesperson)

Congress of South African Trade Unions

110 Jorissen Cnr Simmonds Streets

Braamfontein

2017

P.O.Box 1019

Johannesburg

2000

South Africa

Tel: +27 11 339-4911 Direct 010 219-1339

Fax: +27 11 339-6940

Mobile: +27 82 821 7456

E-Mail: patrick@cosatu.org.za

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