ANC’s Fiscal Fiasco: A Betrayal of the Poor and a Failure of Leadership

THE African National Congress (ANC), once revered as the vanguard of the poor and marginalised, has once again demonstrated its staggering ineptitude and betrayal of its core constituency.

The recent debacle surrounding the postponement of the Minister of Finance’s budget speech is not just an embarrassing blunder; it is a damning indictment of the party’s inability to govern effectively, its disregard for the poor, and its failure to prioritise the needs of ordinary South Africans over its own political survival.

The ANC’s mishandling of this critical moment in South Africa’s fiscal calendar exposes a party that is rudderless, out of touch, and increasingly indistinguishable from the right-leaning opposition it once claimed to oppose.

The budget speech, which was postponed at the eleventh hour, was supposed to outline the government’s plans to address the country’s mounting economic challenges. Among the measures reportedly on the table was an increase in Value-Added Tax (VAT) from 15% to 17%. This proposed hike, which would disproportionately affect the poor and low income earners, is a slap in the face to the millions of South Africans already struggling to make ends meet.

It is a clear indication that the ANC has abandoned its commitment to social justice and economic equality, opting instead to balance the books on the backs of the most vulnerable.

The VAT Increase: A Regressive Tax on the Poor

The proposed VAT increase is a regressive measure that will exacerbate the already dire economic conditions faced by the poor and unemployed. VAT is a consumption tax, meaning it is levied on goods and services at the point of sale. While certain essential items, such as basic foodstuffs, are zero-rated, the reality is that the poor spend a significant portion of their income on non-zero-rated goods and services. From clothing to transport, the increased VAT will eat into the already meagre budgets of low-income households, pushing them further into poverty.

For the unemployed, who rely on social grants and informal sector work to survive, the VAT hike will be nothing short of catastrophic. The increase will erode the purchasing power of social grants, which are already insufficient to cover basic needs. For low income workers, who are often employed in precarious, low-paying jobs, the additional tax burden will make it even harder to afford essentials like electricity, healthcare, and education.

The ANC’s justification for the VAT increase is likely to be framed in terms of fiscal necessity. The government is facing a revenue shortfall, and the budget deficit is growing. But the question that must be asked is: why is the ANC turning to the poor to fill the gap? Why is the party that claims to represent the interests of the working class and the marginalised so quick to impose additional burdens on those who can least afford it?

A Failure of Leadership and Governance

The postponement of the budget speech is not just an administrative hiccup; it is a symptom of a deeper malaise within the ANC. The fact that the Minister of Finance arrived in parliament without having secured the necessary support from coalition partners is a shocking display of incompetence and/or arrogance. It reveals a party that is either unwilling or unable to do the basic work of governance: building consensus, negotiating with allies, and ensuring that critical decisions are backed by the necessary political support.

This failure of leadership is not an isolated incident. It is part of a broader pattern of mismanagement, corruption, and inefficiency that has characterised the ANC’s tenure in government. The party has consistently failed to address the structural issues that are at the root of South Africa’s economic woes. Instead of tackling corruption, cutting wasteful expenditure, and prioritising spending on essential services, the ANC has chosen to take the easy way out: taxing the poor.

Alternatives to Taxing the Poor

The ANC’s reliance on regressive taxes like VAT is not just morally indefensible; it is also economically short-sighted. There are numerous alternatives that the government could pursue to raise revenue and reduce the budget deficit without placing additional burdens on the poor. These include:

Improving Efficiency in Government: The South African government is notorious for its inefficiency and waste. Billions of rands are lost each year due to mismanagement, corruption, and unnecessary bureaucracy. By streamlining government operations, cutting wasteful expenditure, and improving accountability, the government could save significant amounts of money without needing to raise taxes.

Combating Corruption: Corruption is one of the biggest drains on South Africa’s economy. The looting of state resources by corrupt officials and their cronies has deprived the country of billions of rands that could have been used to fund essential services and infrastructure. A serious crackdown on corruption, coupled with the recovery of stolen assets, could provide a much-needed boost to the fiscus.

Reducing the Size of Government: South Africa’s government is bloated and top-heavy. The country has a large number of deputy ministers, provincial premiers, and local government officials, many of whom are paid exorbitant salaries and enjoy lavish perks. By cutting the number of deputy ministers, reducing the salaries of elected officials, and reconfiguring the provincial and local government spheres, the government could save billions of rands.

Selling Unnecessary Government Assets: The government owns a vast portfolio of assets, many of which are underutilised or sitting idle. By selling off unnecessary assets, the government could raise significant revenue while also reducing the costs associated with maintaining these assets.

Prioritising Spending: The government needs to take a hard look at its spending priorities. Instead of wasting money on vanity projects, unnecessary travel, and lavish events, the government should focus on funding essential services like healthcare, education, and social welfare. By reallocating resources to where they are needed most, the government could improve the lives of ordinary South Africans without needing to raise taxes.

More Efficient Tax Collection: Another crucial alternative, and one often overlooked, is significantly improving the efficiency and effectiveness of the South African Revenue Service (SARS) in collecting existing taxes. This will help to stem revenue leakages through tax evasion, avoidance, and illicit financial flows.

Strengthening SARS through enhanced resources, skilled personnel, and greater independence would not only boost revenue collection but also create a fairer tax system where everyone pays their due. Closing these loopholes and ensuring compliance from wealthy individuals and corporations could generate substantial additional revenue, negating the need to burden the poor with increased VAT.

The ANC’s Betrayal of Its Core Values

The ANC’s willingness to impose additional taxes on the poor is a betrayal of the party’s core values and its historical mission. The ANC was founded on the principles of social justice, equality, and the upliftment of the poor. Yet, under its current leadership, the party has become increasingly neoliberal in its economic policies, prioritising fiscal austerity over the needs of the people.

This shift has not gone unnoticed by the public. The ANC’s declining support in recent elections is a clear indication that many South Africans no longer see the party as the champion of the poor. Instead, the ANC is increasingly seen as a party of elites, out of touch with the struggles of ordinary people.

The irony is that the ANC’s failure to defend the poor is handing political capital to the right-leaning Democratic Alliance (DA). The DA, which has traditionally been seen as the party of the wealthy and privileged, is now positioning itself as the defender of the poor against the ANC’s regressive tax policies. This is a damning indictment of the ANC’s failure to live up to its own ideals.

A Call for Accountability and Change

The ANC’s mishandling of the budget speech and its proposed VAT increase are not just policy failures; they are a betrayal of the party’s historical mission and the people it claims to represent. The ANC must be held accountable for its failures, and it must be forced to confront the reality that its current trajectory is unsustainable.

The government must abandon its reliance on regressive taxes and instead focus on tackling corruption, cutting wasteful expenditure, and prioritising the needs of the poor. The ANC must remember that it is supposed to be a left-leaning party, committed to social justice and economic equality. If it continues down its current path, it risks losing whatever remaining credibility it has and becoming irrelevant in the eyes of the people it was founded to serve.

South Africa deserves better than a government that balances its books on the backs of the poor. It deserves a government that is committed to building a more just, equitable, and prosperous society for all. The ANC must either rise to this challenge or step aside and make way for those who will.

Conclusion

The consequences of this fiscal mismanagement extend far beyond mere economic indicators. The erosion of public trust in the ANC has profound implications for social cohesion and political stability. When citizens lose faith in their government's ability to manage the economy and provide basic services, they become disillusioned and disengaged.

This can lead to social unrest, political instability, and a decline in civic participation. The ANC's fiscal failures are not just hurting the poor; they are undermining the very foundations of South African democracy. The party seems content to preside over a crumbling edifice, more concerned with internal power struggles than with the welfare of the nation.

Furthermore, the ANC's continued reliance on short-sighted fiscal policies is jeopardising South Africa's long-term economic prospects. By failing to invest in education, infrastructure, and innovation, the party is condemning the country to a future of low growth, high unemployment, and persistent poverty.

A skilled workforce, modern infrastructure, and a thriving innovation ecosystem are essential for attracting investment, creating jobs, and driving economic development. Instead, the ANC clings to outdated ideologies and patronage networks, squandering opportunities and mortgaging the future of generations to come.

The time for empty promises and hollow rhetoric is over. South Africa needs bold leadership, decisive action, and a genuine commitment to putting the interests of the people first. This requires a fundamental shift in priorities, a willingness to confront corruption, and a determination to build a more inclusive and sustainable economy.

The ANC, mired in its internal contradictions and historical baggage, seems incapable of providing this leadership. The party's recent fiscal fiasco is merely the latest evidence of its failure to adapt to the challenges of the 21st century.

Ultimately, the future of South Africa depends on the ability of its citizens to hold their leaders accountable and demand change. The ANC's fiscal failures should serve as a wake-up call, galvanising civil society, opposition parties, and ordinary South Africans to demand a better future.

Only through sustained pressure and a commitment to good governance can South Africa overcome the legacy of mismanagement and corruption and build a more just and prosperous society for all. The alternative is a continued slide into economic decline and social disintegration, a fate that no South African can afford to accept.

(Dube is a political economist, businessman, and social commentator on UkhoziFM. His views don't necessarily reflect those of the Sunday Tribune or Independent Media)

SUNDAY TRIBUNE