Finance Minister Tito Mboweni has announced no major tax increases in his 2020 Budget Speech, instead giving taxpayers relief to the tune of R2 billion.
Instead, he’s finding the money to try and balance the government’s books through spending cuts and slashing the state’s salary bill, a move that has already sparked a fierce reaction from trade unions.
Mboweni said the tax break was one of the measures he hoped would jump-start the economy, but he had also warned that power cuts could stifle growth and that a stable electricity supply was the government’s most pressing priority.
Mboweni delivered his Budget Speech with an aloe plant perched in front of him, his symbol for the country’s resilience in tough times.
“The Aloe Ferox survives and thrives when times are tough. It actually prefers less water. It wins even when the odds are against it.”
That resilience will be needed as the government moves to curb the public sector wage bill, which is already crowding out spending on capital projects and service delivery. Treasury said civil servants’ salaries had grown 40% in real terms over the past 12 years, with no equivalent increase in productivity, but unions are angry.
Mboweni said the economy should get a number of jump starts over the next 18 months: they include the R2 billion in tax relief he’s announced, lower inflation, lower interest rates and reforms in the electricity sector.
But he warned that persistent electricity problems could hold back growth.
“Over the next three years, we expect growth to average just over 1%. Therefore, a stable supply of electricity will be our number one task.”