This was according to FF-Plus leader Dr Pieter Mulder, who released a statement prior to the tabling of the Medium Budget Policy Statement in Parliament today.
An increase in taxes would “be the wrong choice” and “will only restrict economic growth further”, said Mulder.
The focus should rather be on “restriction of government spending and resisting unreasonable trade union demands,” he said.
Nene’s response turned out to be not an either/or solution, as suggested by Mulder.
The state would instead take a double-barrelled approach to address SA’s widening fiscal deficit and mounting sovereign debt burden which would entail trimming down on expenditure and increasing revenue earned from taxes.
One of the concrete measures proposed by Treasury as part of a fiscal package that would reinforce sustainability was to reduce the non-interest expenditure ceiling by R10 billion in 2015/2016 and R15 billion in 2016/2017.
READ: Medium Term Budget Policy Statement 2014
Proposed reductions to planned expenditure ceilings would be targeted to avoid cuts in front-line service delivery, said Nene at a press conference in Parliament.
To effect the lower ceiling, national government would, inter alia, freeze budgets of non-essential goods and services at 2014/2015 levels, Treasury explained in the Medium Term Budget Policy Statement.
For example, across national departments, planned expenditure on travel and subsistence has been cut by R555 million. Advertising and communications budgets have been reduced by R240 million. Lower spending on consultants will generate savings of R370 million, while spending on venues and catering will be R150 million lower than previously planned.
“Government acknowledges that the proposed measures may have a dampening effect on economic growth in the short term, but they are essential to sustain investment and revive growth over the longer term,” Treasury said in the policy statement.
In terms of taxes Treasury proposed structural increase in revenues over the medium term. The recommendations of the Davis Tax Committee will be announced by the Minister of Finance in February when he tables the 2015 Budget in Parliament, according to Treasury.
