High food prices and VAT causing Cyril Ramaphosa to feel the pressure

2018-07-15 10:04
Cosatu president Sdumo Dlamini. (Jabu Kumalo, City Press)

Cosatu president Sdumo Dlamini. (Jabu Kumalo, City Press)

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President Cyril Ramaphosa might be strong-armed to revise the budget presented by then finance minister Malusi Gigaba earlier this year, as alliance partners fight to reduce the burden on the poor caused by increasing fuel prices and the VAT rise.

However, after a number of ministers made presentations to the alliance council this week, it became clear that legislative limitations are proving a difficulty in coming up with workable solutions, despite Ramaphosa promising to come up with a set of measures to mitigate the tough economic situation.

READ: Brace for more pain, as price increases push poor to cut back on food purchases

The alliance, ANC, SA Communist Party (SACP) and union federation Cosatu will meet for the second time on Monday to consider options and their effect on the economy.

SACP second secretary-general Solly Mapaila said the president, as the executive authority of the state in terms of the Constitution, should use his powers.

"We want to explore every other thing possible and see what the effect will be in that regard."

Mapaila said various proposals had come out of the meeting and would have to be filtered into the medium-term budget framework around September and October.

'People are up in arms'

"When that process starts, it must take into account our input on VAT and its effect on the poor. In terms of the law, you can’t reverse the fuel levy, including the VAT, because it is a legislative process. Unfortunately, you need the minister of finance to give another budget speech to reverse that.

"It might happen only in the next budget but there is a sense of urgency because people are up in arms," Mapaila said.

Ramaphosa could be prevailed upon to force Finance Minister Nhlanhla Nene to table a medium-term budget policy statement revising the fiscal framework for the country in the current financial year and in proposals for the next three years.

The other legislative instruments that would enable such flexibility in times of crisis could even result in a national budget adjustment.

Mapaila said it was clear from presentations at the alliance meeting that there were legislative limitations which needed to be considered after weighing up various options.

Nene said a particular percentage of the petrol levy was not merely for the benefit of roads through the road accident fund, but it was also channelled through the fiscus to address some of the many urgent social needs of the country.

Nene was one of at least four ministers who had to present and be interrogated about the financial standing of the country, including a rundown on the taxation process and laws in totality.

Decisive intervention

Echoing Mapaila’s sentiments was Cosatu president Sdumo Dlamini, who said only a decisive intervention by the ANC-led government was what should come out of these talks.

"Clearly on our side there is an acceptance that this [financial strain] thing is biting. It could escalate into problems because it seems people are mobilising themselves to fight fuel hikes. Which is why we, as Cosatu, must fight. There should be other means put in place not to mitigate but to really intervene decisively."

Dlamini said the country should consider looking for other alternatives instead of relying on the expensive oil cartel Opec.

"If we continue to get that [oil] from where we are getting it then we shall remain in this situation. What is alarming is that [the people have not reacted in this way before]. The is the first time ... so we don’t know what the real trigger is."

Energy Minister Jeff Radebe talked about independent power producer contracts he recently signed despite much opposition from Cosatu, which warned of a looming jobs bloodshed in coal mines and other secondary sectors.

Public Enterprise Minister Pravin Gordhan briefed the meeting on the country’s ailing state-owned enterprises and Mineral Resources Minister Gwede Mantashe focused on the draft mining charter that aims to transform the sector.

Mapaila said the idea was "to get a better understanding of where the situation is in terms of the economy and that’s why we invited all those ministers. We wanted to understand fully in terms of any decision that we take."

Read more on:    anc  |  cyril rama­phosa  |  economy  |  politics  |  poverty

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