IRR invites the Minister of Finance and National Treasury to discuss tax-cut proposals

The Institute of Race Relations (IRR) has invited the Minister of Finance, Enoch Godongwana, and senior National Treasury officials to hear its proposal for tax cuts.

Says IRR campaign manager Makone Maja: ‘The entire proposal is contained in a paper published by the Institute titled “The IRR’s Blueprint for Growth: Slash waste, cut taxes.” In it the Institute makes a case for tax cuts to stimulate economic growth. The Institute particularly identifies two taxes that we believe can be cut immediately:  reducing VAT from 15% to 11.5% and cutting fuel levies.’

Maja notes that these tax cuts can be made without a corresponding decline in the quality of services.

Maja submits that the propositions for cutting tax can be made on various fronts. The first reason is that giving money back to taxpayers to spend on their needs in these pressing times will provide them with immense financial relief; increase consumer spending; and drive down the cost of goods and services at a time of high prices arising in large part from interest rate hikes, as well as poor management of the currency resulting in increased fuel prices.

Maja adds that the second reason for cutting taxes and thus putting pressure on government revenue is to limit government waste of taxpayer funds. Says Maja: ‘The Auditor General of South Africa reported late last year that government departments had lost R28.22 billion in unauthorised expenditure over the last four years, and that irregular expenditure in 2022-23 amounted to R63.37 billion, which she said could be higher due to changes in disclosure requirements from auditees.’

Maja adds that cutting taxes will mitigate the gross loss of taxpayer funds through such wasteful and fruitless spending and confine government access to resources it can manage efficiently, while simultaneously maintaining the same or improved levels of service delivery.

Maja continues: ‘The Institute bases this argument on what it calls the “Zondo dividend”, broadly, the billions that would be saved if the government adopted the recommendation in the report of the State Capture Commission presided over by Chief Justice Raymond Zondo to forego preferential procurement in exchange for value-for-money procurement and give taxpayers value for their money.’

Says Maja: ‘The Institute would also like to engage the Treasury on the BEE premium. This is the premium government pays when it sources goods and services from BEE companies. Non-value-adding characteristics are prioritised which come at a higher cost – not only at the expense of the taxpayers but of service delivery as well. This information about the BEE premium is very hard to come by and the Institute would like to encourage Treasury to be forthcoming with the true cost of the “preferences” in preferential procurement and whether it believes the country can still afford to place them above quality service delivery and the interests of all other South Africans, especially the poor, who suffer most.’

Maja says economic growth will require transparency, accountability, bold decision making and reforms from government to change the country’s fortunes. The Institute hopes that both Treasury and the Minister of Finance will be interested in letting the public know whether it is up to the task.

Media contact: Makone Maja, IRR Campaign Manager Tel: 079 418 6676 Email: makone@irr.org.za

Media enquiries: Michael Morris Tel: 066 302 1968 Email: michael@irr.org.za

Sinalo Thuku, Tel: 073 932 8506 Email: sinalo@irr.org.za