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It all now hinges on this: Can Govt deliver on its promise to cut its wage bill?

27 February 2020 9:28 AM
Tags:
Eskom
Tito Mboweni
Tax
Independent Power Producers
VAT
Judge Dennis Davis
Refilwe Moloto
Davis Tax Committee
Moody's
IPPs
Public Sector Wage Bill
2020 Budget Speech
Sovereign wealth fund
"It’s now all predicated on saving R160bn in public sector wages. Are we going to keep to our promises?" asks Judge Dennis Davis.

No major tax increases… Finance Minister Tito Mboweni was unexpectedly kind to South Africa’s longsuffering taxpayers.

Mboweni announced tax relief worth R2 billion on Wednesday.

He hopes to instead find extra money through spending cuts and – this is the big one – hacking the Government’s wage bill.

Government salaries are crowding out spending on capital projects and service delivery.

Civil servant salaries have grown by 40% - in real terms – over the past 12 years with no increase in productivity, according to Treasury.

Finance Minister Tito Mboweni, President Cyril Ramaphosa and deputy president David Mabuza in Parliament, Cape Town, on 26 February 2020 for the 2020 Budget speech. Picture: GCIS.

Refilwe Moloto asked Judge Dennis of the Davis Committee on Taxation for his take on Mboweni’s Budget Speech.

It [sovereign wealth fund] doesn’t seem to make any fiscal sense at all! … I don’t think it’s going to fly, but I may be wrong…

Judge Dennis, Davis Committee on Taxation

It was a brave budget… If you increase VAT by 1%... the 0.9% growth that he estimated will go down to 0.5% or 0.6%. He was right to keep taxes as they are, but it’s now all predicated on saving of R160 billion over three years in public sector wages… It all depends on a political position. Are we going to keep to our promises, whatever the unions say…?

Judge Dennis, Davis Committee on Taxation

We are finding increasing levels of VAT fraud. One of the things we need to do over the next 12 months is to curb that. That will bring in a lot more money.

Judge Dennis, Davis Committee on Taxation

We need the Independent Power Producers expanded… But even with that, you’re still going to have to bail Eskom out to some extent… The present administration inherited a shocking situation!

Judge Dennis, Davis Committee on Taxation

If you were Moody’s, would you think Government will hold the line on the public sector wage bill? If you think they will you would not give us a downgrade… If you think it’s not going to happen… you would downgrade us. It’s as simple as that. I don’t think it’s about Eskom…

Judge Dennis, Davis Committee on Taxation

Listen to the interview in the audio below.

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27 February 2020 9:28 AM
Tags:
Eskom
Tito Mboweni
Tax
Independent Power Producers
VAT
Judge Dennis Davis
Refilwe Moloto
Davis Tax Committee
Moody's
IPPs
Public Sector Wage Bill
2020 Budget Speech
Sovereign wealth fund

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