Johannesburg – South Africans must not become complacent with current gross domestic product growth levels, and all stakeholders must make the effort to ensure sustainable economic growth. This will boost the tax revenue needed to fund services for society's most vulnerable, Finance Minister Malusi Gigaba said on Monday.
He was addressing the Tax Indaba 2017 in Sandton on Monday. Gigaba said that although GDP rebounded 2.5% in the second quarter of the year, now is not the time to be complacent. The revised economic outlook will be announced at the mini budget on October 25.
“We must increase the revenue base by growing the economy on a faster and on a sustainable basis,” he said. Both government and business have committed to playing their respective parts in ensuring inclusive growth.
Gigaba said South Africa offers investors many opportunities. Structural reforms must be implemented in the economy to encourage investment. The 14-point plan announced in June should encourage business confidence by providing the policy certainty investors seek, he explained.
There needs to be a level of decisiveness by government and greater
cooperation between business and government for the economy to grow
better. Government is planning to continue investing in infrastructure
development, as this will draw in needed investment from the private
Fiscal and monetary policies should encourage consumer
confidence to boost spending. Improved consumption confidence will increase
household consumption, he said. The latest tax ombud report on the systems at the South African Revenue Service also indicates what must be done to instill confidence in taxpayers, he said.
He also highlighted opportunities to invest in value-adding sectors, such as manufactiuring and agro-processing.
Government expenditure takes a dip
Gigaba acknowledged that the fiscal consolidation path was maintained not by increasing revenue, but by dropping expenditure on a gradual basis. “Government is not in a position it would like to be,” he said.
He explained that the fiscal consolidation path should be pragmatic, in that taxpayer money should be spent wisely until such time as the economy is growing to expand the activities spend is directed to.
“This is an opportunity to change the culture of government in terms of employment, the size of government and the programmes implemented.”
Non-core or non-priority programmes in government should be identified and resources removed from them to be spent on priority
programmes, he explained.
Current growth levels which are outpaced by population growth are “inefficient and unsustainable”, said Gigaba. Drastic
measures should be taken to ensure growth is more sustainable and
SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.