Finance Minister Nhlanhla Nene’s 2015/16 budget took the correct approach in dealing with power utility Eskom’s financial issues, ANC treasurer general Zweli Mkhize said on Wednesday.

“I’m pleased that there’s a very strong effort to deal with the Eskom issues,” he said.

“The allocation from government… and balancing out of the utilisation I think is an important one.”

The commitment to involve the private sector in generating revenue was a positive move.

Mkhize said he was pleased with the taxation model Nene planned to use and that VAT (value added tax) had been left unchanged.

“I’m pleased that there was not an effort to tamper with the VAT as it has a very strong impact on the poor.

“The minister has done a good job in being able to balance the budget… it shows government’s commitment to balancing the budget under very difficult financial constraints.”

Nene was presenting his first main budget, for 2015/16, as finance minister to the National Assembly on Wednesday.

‘Tax increase a sad day’

It was lamentable that government could not balance the books without a personal income tax increase, the Freedom Front Plus said on Wednesday.

“I think it’s a sad day in the sense that [in] the government of 20 years, there was no personal tax increase really, and now for the first time there is one percent,” party leader Pieter Mulder said in reaction to Finance Minister Nhlanhla Nene’s budget tabled in Parliament.

“That shows that they couldn’t balance their books without that. Surely, if they should have a tax increase, I would’ve preferred VAT (value added tax) then.

He said hiking VAT by one percent would have contributed between R18 billion to R20 billion to the fiscus and solved the government’s problem.

He lamented government opting for a personal income tax hike, as it would affect a small number of people, with high-income citizens having to carry the greater part of the burden.

“It’s becoming too heavy,” Mulder said.

He called state-owned enterprises (SOEs) “children that are not becoming independent”.

“They are not being privatised in a sense and still need money and they’ll never be on their own legs if we do continue this way,” Mulder said.

“The centralisation, maybe we can fight corruption that way. Let’s hope it’s better, but then surely the administration must be good enough that there is no bottleneck there.

“That’s the risk on the other side. We’ll have that problem at the end of the day.”

DA response

With tax and the fuel levy going up, employed South Africans are in for a difficult time, DA parliamentary leader Mmusi Maimane said on Wednesday.

“Increase in tax and fuel levy will affect working South Africans who also use the roads. We are in for a difficult period,” Maimane said in reaction to finance minister Nhlanhla Nene’s budget tabled in Parliament.

Nene announced some personal income tax increases, a raise of the general fuel levy, of the Road Accident Fund (RAF) levy, and of the electricity levy, and increased excise duties.

Consolidated government spending was expected to be R1.35 trillion and revenue about R1.2tn. GDP was projected to grow from two percent in 2015 to 2.4 percent in 2016, and three percent in 2017. SAPA