MEDIA RELEASE
NACTU PREVIEW INPUT ON THE NATIONAL BUDGET BY THE MINISTER OF FINANCE
16th February 2010
1. Removal of Exchange Control Regulations
The Minister had given an indication in his MTBPS in 2009 that government
would undertake removal of the remaining exchange control regulations.
Nactu finds this position to be at cross-purposes with our current
socio-economic situation of rampant poverty and high unemployment. This -in
labour's view- appears to be out of step with the general policy direction
in global macroeconomic governance where caution on further liberalisation
has held sway. We see exchange control abolition as feeding onto the
discredited neoliberal agenda of deregulation and free markets.
It is Nactu's view that this will further embolden the "casino economy"
phenomenon, by lessening restrictions on currency speculators.
What this policy stance will also do is to aid and abet capital and profit
repatriation, and thus weaken capital formation inside the country. NACTU
calls upon the Minister to share with the country, the government's
rationale for this ill-advised policy stance, during the budget speech.
2. Financial Transactions Tax and Review of South African Banking
Regulations.
Governments at the G20 London Summit and during the UN Conference on the
Global Financial and Economic crisis in 2009, had committed themselves to
engage social partners and the civil society of their countries, to review
the causes of the crisis and proffer solutions to banking and investment
regulations.
This above position is also articulated in the South African Framework
Response. Yet, the National Treasury as the lead government department
that represents the South African position in these global forums, has not
subjected the SA position to social dialogue.
Nactu calls for an urgent national and social dialogue on the South African
government's position on the Financial Transactions Tax (FTT), and other
global financial governance policies aimed at addressing the causes of the
global economic crisis.
We urge the Minister to use the budget speech to illuminate on the policy
process between government, trade unions, business and civil society on the
FTT and other national financial regulatory review issues.
3. Increase Corporate Tax to Finance the Expanding Government Deficit.
The global financial crisis has caused untold suffering on the employment
and sustainable livelihoods of South Africans. In response, government was
compelled to undertake an ambitious counter-cyclical public expenditure
programme, to alleviate the problems of poverty and massive job losses.
As a consequence of this, South Africa, for the first time since 2006, has
recorded a fiscal budget deficit of around 6%. The Minister should use the
budget speech to share with the nation how he hopes to keep this deficit
under check without compromising key social and public expenditure
priorities.
Many countries - including a number in the industrialised world - have
increased corporate tax and tax on high-income earners, to finance their
public and social spending priorities, and to reduce the government deficits
caused by the global economic and financial crisis.
Nactu recommends that the Minister of Finance increases corporate tax and
tax on high-income earners to fund the fiscal deficit. Other measures such
as Secondary Tax on Companies, Royalties Tax on Mines, Capital Gains Tax and
Tax on Luxury Goods should be considered to address the unemployment,
development and growth challenges facing the country.
4. Adopt a Redistributive Tax And Fiscal Policy.
We once again urge the Minister to adopt a redistributive tax and fiscal
policy approach in the national budget, given the wide inequality, high
poverty and unemployment rates in South Africa. Public expenditure and
fiscal spending priorities in education, housing, health and infrastructure
must be directed to areas of greatest need such as township and rural
schools, hospitals, clinics and roads. This will contribute greatly to
increasing the social wage of the poor and marginalised.
The government should meet its obligations of socio-economic rights as
enshrined in our constitution. The Minister of Finance in his first budget
speech, has an opportunity to demonstrate this by acceding to labour and
civil society's long standing demand for a basic income grant for unemployed
workers.
5. Increase Allocations for Agrarian Reform and the Funding of Eskom
and other Parastatals
Poverty in our country is exacerbated by the huge land disparities between
black and white people. This is as a result of the plunder and forced
removals during centuries of colonialism and decades under the brutal system
of apartheid. The land reform programme has stalled largely due to the
fiscal constraints imposed by the odious willing-buyer-willing-seller
approach.
Nactu calls on government to increase fiscal allocations for land reform and
agricultural development, so that land redistribution and restitution
programmes are expedited and performance is improved.
We also call on government to finance the build programme of Eskom from
fiscal allocations so that workers and the poor are not burdened with an
annual 35% multiyear increase over 3 years, in electricity tariffs. Such
funding should also be extended to other state-owned entities to enable them
to meet their public service mandate and to obviate the tendency to
privatize public assets.
The above are priority issues that Nactu would like to see addressed by the
Minister of Finance in the 2010 national budget.
Issued by National Council of Trade Unions
For Enquiries Call 011 - 833 1040
Manene Samela - General Secretary
Cell: 082 416 6723
Moemedi Kepadisa - Policy Officer
Cell: 074 322 1711
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