IFP reply to Budget Speech by Hennie Bekker MP

MEDIA STATEMENT RELEASED BY:
HENNIE BEKKER MP
IFP SPOKESPERSON ON FINANCE

February 21, 2007

The Inkatha Freedom Party welcomes the budget as presented today by the Minister of Finance and congratulates Minister Manual on a well constructed budget for the new financial year

The task of meeting the increased estimate of expenditure was simplified by the massive overrun of revenue from tax on the different sectors being personal tax, value added tax and particularly corporate/company tax which produced more than R30 billion surplus. A doubtful balancing factor in the elimination of the estimated shortfall was the under expenditure by several state departments.

The IFP is highly critical of the latter since this means a limitation and lack of service delivery. The IFP is however delighted that the estimated shortfall miraculously turned out to be a budget surplus of R6bn.

The IFP wishes to congratulate SARS for again being the crown jewel of the Minister of Finance. The IFP further believes that the time has arrived to seriously consider the lowering of corporate taxes, as well as personal income tax, which with inflation, has caused substantial fiscal drag.  We therefore believe that the time is ripe for a taxation summit in order to simplify the tax system and to thrash out the realities about taxation in South Africa, in order to make us a global economic player in the international world.

The IFP is grateful that the Minister has acceded to the IFP's request to abolish all taxation on investments by Pension Funds. We trust that this saving will end up in the pockets of the pensioners and retiring persons.

The IFP stated before that we must have a sustainable economic growth rate of about 10% and we will support all Government endeavours to achieve this.
Government must realise that only the private sector can create the necessary permanent jobs and to sustain them. Much greater cooperation between government and the private sector must be facilitated. The IFP appreciated Minister Manual's reference that red tape in business with regard to Government regulations must be eliminated.

The additional estimate of 34% for crime prevention is welcomed particularly the increase of 30 000 in the police force. The IFP however insists on the better utilisation of resources in combating crime.  We appreciate the Minister's reference to Prince Mangosuthu Buthelezi's speech and contribution on the prevention of crime.

Education and particularly skills development is of fundamental importance to South Africa. The Minister made a concerted effort to improve this education and skills development with greater funding and bursaries to students. Greater attention to the Health department and with emphasis on HIV/Aids is a step in the right direction.

The IFP applauds the extension of the system of Welfare grants and the introduction of a subsidy for low income earners; together with the improvement of other social grants and the introduction of a form of a
compulsory savings scheme, or Government pension scheme. The IFP will however study the details as we are apprehensive of the creation of a 'honey pot' which can be creamed off by corruption.

The IFP believes that whether Minister Manual believes it or not, we are indeed slowly moving towards the gradual introduction of a Basic Income Grant, as proposed in the Taylor report.

A fresh aspect brought up by the Minister is that the Balance of Payments should be less rigidly applied in terms of fiscal control.  Furthermore the greater emphasis on capital expenditure on infrastructure and building operations will create further spin offs for the country. In this regard the Housing budget also received appropriate attention. The development of stadia and infrastructure for the 2010 World Soccer tournament will even have a greater economic effect through the multiplier effect.


FOR FURTHER INFORMATION CONTACT:
Mr Hennie Bekker MP: 083 255 4520
Noleen Hendricks: 082 886 9848