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As Minister Enoch Godongwana prepares to table the third version of the Budget, in as many months, it is time to acknowledge that the problem is no longer just about what’s in or out of the budget. The deeper issue is how the budget is built in the first place. The process has been chaotic and exclusionary, exposing how ill-suited the current budget-making framework is for a Government of National Unity (GNU).

We urgently need new, inclusive protocols and decision-making structures fit for a coalition era. A GNU requires coordination, consultation, and compromise - not ambushes and ultimatums.

Up to this point, the budget debate has been dominated by revenue proposals, particularly the original 2% VAT hike and the revised 0.5% increase. Let us be clear as GOOD we did not support the VAT increase. However, we were willing to support the fiscal framework and work in good faith to identify constructive alternatives to both the VAT hike and personal income tax bracket creep.

It has always been our position that raising VAT and failing to adjust lower income tax brackets to account for inflation disproportionately affects middle-class and poor South Africans, those for whom every cent counts. 

GOOD’s preference remains clear that revenue measures should target those with the greatest means, not those with the least. We have consistently offered implementable, progressive alternatives that would enhance equity without undermining economic growth:

Scale back tax breaks that favour the wealthy, such   as the R350,000 tax-free retirement savings cap and medical tax credits.

Scrap the ineffective Employment Tax Incentive,   which costs billions and has shown limited impact on employment.

Consider a temporary drawdown from the Gold and   Foreign Exchange Contingency Reserve Account to help close the short-term revenue gap.

Transition to zero-based budgeting to eliminate   waste and reallocate resources from scratch.

Introduce a wealth tax targeting   ultra-high-net-worth individuals to begin addressing South Africa’s extreme inequality.

However, we do not want to see the last three months of negotiations and deliberations, where parties made proposals on how to reduce government expenditure and increase revenue to the National Treasury, result in an austerity budget. That cannot be the outcome of collective effort in a democracy that is meant to serve the people.

While we have opposed the regressive revenue proposals, GOOD has consistently supported the expenditure side of the budget. In both failed versions, we backed the commitments to social spending, education, and infrastructure. These must be retained in Budget 3.0. There can be no compromise on the state’s duty to support the vulnerable, invest in human development, and build the infrastructure needed for inclusive growth. GOOD will not support a budget that does not retain the Social Relief of Distress Grant.

Going forward, we must now repair the process, not just the numbers. The budget-making system must evolve to reflect the reality of coalition government. It is time to move beyond this drawn-out budget cycle and get to the real work of delivering for the people of South Africa.

Issued by GOOD Secretary-General Brett Herron