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DA says freezing public sector salary increases will cancel need for VAT hike

1 Mar 2018

The DA says a freeze on increases to public sector salaries in 2018-19 would save R38bn and render unnecessary the need to raise the rate of value added tax (VAT) by one percentage point as proposed in the budget.

DA says freezing public sector salary increases will cancel need for VAT hike

The Treasury expects a one percentage point increase in the VAT rate to raise R22.9bn.

The DA will be launching a national campaign for the VAT increase to be overturned and will be using parliamentary processes in a bid to ensure that this is achieved. The party's deputy finance spokesman, Alf Lees, has also written to Finance Minister Nhlanhla Nene to withdraw the VAT increase in the budget and reconfigure the fiscal framework.

The party believes that public sector employees and public representatives should help to address the national crisis by agreeing to a freeze on salary increases.

Not paying performance bonuses to civil servants would save R2.9bn.

"Increasing VAT is unnecessary and is simply an easy way out for a government that is refusing to take responsibility for its poor management of the fiscus," Lees said at a media briefing on Wednesday.

He said no tax increases would be required if public servants did not get a salary increase in the coming year. An amount of R587bn in 2018-19 has been allocated for the public sector wage bill, R38bn for a salary increase.

The DA argues that savings could also be made by reducing the size of the executive; reducing the number of foreign missions; running provincial legislatures more efficiently; and withdrawing from the New Development Bank.

Source: BDpro

Source: I-Net Bridge

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