Mmusi Maimane, leader of Build One South Africa (BOSA), discussed the South African government's ongoing budget crisis and called for decisive action in the face of the country’s growing fiscal deficit.

In an interview on Newzroom Afrika, Maimane addressed the challenges facing the treasury, as well as the broader economic and political consequences of insufficient decision-making.

He emphasised the urgent necessity for significant reductions in government expenditure while advocating for a shift away from tax increases to prevent further deterioration of the nation’s financial position. Maimane asserted that South Africa stands at a critical crossroads, where the government must make difficult decisions regarding its budget.

He pointed out the alarming reality that South Africa’s budget deficit, currently at 5%, is unsustainable, with a significant portion of the country’s revenue being consumed by debt repayment and social spending.

"For every R1 that comes into the finance class, 22 cents goes toward funding debt, 30 cents goes to employee costs, and over 60 cents goes toward the social wage," Maimane explained, underscoring the urgency of addressing the budget shortfall.

He also noted that while tax increases, such as raising VAT, are being discussed, they are not a sustainable solution.

Get your news on the go, click here to join the IOL News WhatsApp channel.

"Increasing taxes, especially for the wealthy, is the most ineffective way of revenue collection simply because of the loopholes that exist," Maimane said, stressing that focusing on growth and improving government efficiency should be the priority.

He further argued that raising taxes on the wealthy would likely result in minimal returns, as they can exploit existing tax loopholes.

Maimane proposed alternative measures, including the reconsideration of social relief grants and cuts to government agencies that he believes do not offer substantial benefits to the country.

"We need to confront the SRD grant; it was an intervention brought on during COVID, but it is now unaffordable," he said.

He also highlighted the inefficiency within government agencies, such as the South African Revenue Service (SARS, which could collect more revenue if better funded. "Funding SARS would be a more sustainable long-term solution than short-term tax increases," Maimane argued.

Addressing the political ramifications, Maimane expressed concern that political motivations could hinder the country’s ability to make necessary fiscal decisions.

"At this stage, for many citizens, it feels like it's an arm wrestle between political parties trying to assert political relevance," Maimane said.

He stressed that the country’s future cannot be sacrificed for political maneuvering, calling on President Cyril Ramaphosa to take a strong leadership role in guiding South Africa through the crisis.

"We need to act decisively, and President Ramaphosa needs to take a strong lead in this way," Maimane said.

He warned that failing to make the right choices could lead to an economic recession, further cuts to essential services such as policing, and long-term harm to South Africa’s investment potential.

Minister of Finance Enoch Godgonwana is expected to table the budget on March 12.

hope.ntanzi@iol.co.za

IOL Politics

#south-african-revenue-service

Mmusi Maimane urges immediate action on SA's budget crisis

SARS issues warning on unregistered tax practitioners