Budget adds to problems in delivery to the poor
Trade-offs should be debated because paring back infrastructure grants will fuel local government woes, write Karen Heese and Kevin Allan
Financial markets approved of last week’s budget, saying it demonstrated commitment to fiscal consolidation (by increasing revenue and curbing expenditure). But who will bear the cost of this? Trade unions and opposition parties have criticised the "slap-in-the-face" one percentage point hike in value-added tax as a regressive tax option, given its disproportionate impact on the poor and working class. For workers, who spend a significant portion of their income on transport costs, hikes in the fuel and Road Accident Fund levies will cause further pain. The poorest South Africans should also be concerned about the budget’s proposed cutback in provincial and municipal infrastructure grants. Cuts to the municipal infrastructure grants imply less funding for the provision of basic services, compromising poor communities’ quality of life over the medium to long term — especially in municipalities unable to leverage their income. Unions have blamed the Treasury for these choices, but the...
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