Smooth adoption of budget good for governance and the economy

After last year’s debacle in which finance minister Enoch Godongwana had to return to the National Assembly more than once to have the national budget passed, yesterday’s tabling of this year’s budget came as welcome relief to many. Last year’s experience suggested that under the then new government of national unity and a hung parliament, it was going to be difficult to pass the budget in future and that this threatened the stability of both governance and the economy. However, since that period when MPs openly revolted against Godongwana’s controversial plan to increase Value Added Tax, there seems to be a better working relationship between parties, and the National Treasury appears to have realised that it serves a multi-party government.

Hence the budget presented yesterday was welcomed, almost universally, as a “good news budget”. Whereas Godongwana had warned last year that the sluggish economy would lead to tax increases of more than R20bn in the new year, such plans have now been scrapped. This is partly due to the R28.8b of tax revenue that has been accrued from the current boom in commodity prices.

But credit must also go to the SA Revenue Services which, due to increased efficiency, has once again collected more than what was expected. Instead of tax increases, Godongwana has announced tax relief for different categories of income earners, a move that would be welcomed by many households around the country struggling with the high cost of living. Other good news from the budget is that the National Treasury predicts the economy to grow by 1.6% this year, 1.8% next year and 2% in 2028.

[paywall]

Although these predicted figures are still far lower than the 3.5% some analysts say we need for the economy to start creating hundreds of thousands of new jobs each year, their significance is that it would be for the first time since 2016 that SA experiences three successive years of economic growth. These indicators, we hope, tell the story that SA has begun to turn the corner at economic level and that institutions like Sars, almost completely destroyed during the state capture years, are once again positively contributing to the country’s economic well-being.

[/paywall]