Comrade Gcaleka- Mazibuko
07 March 2025
The African National Congress has always emphasised a developmental macroeconomic framework to advance the transformation our economy and address the injustices of colonialism and apartheid. History is the best teacher and the history of governments globally and in our country demonstrates the importance of taxation as an instrument to fund the budget of government and meet policy objectives. The Apartheid government was also built on the taxation of the mineral complex, various industrial sectors and the taxation of marginalised black people to subsidise the implementation of the colonial and apartheid government policy which served a white minority who acquired wealth and enjoyed the best of the nations development.
The ANC has always advanced a progressive redistributive tax system which sources income from the wealthy, business, high income earners, and working South Africans to benefit the poor and lower income households and underdeveloped areas. Redistribution is a critical element of transforming a political economy of a Country and the ANC will always be prudent based on a balance of evidence in taking fiscal policy decisions related to the fiscal framework and tax proposals.
The budget deficit in the other hand is a product of spending increases based on government policy proirities. The ANC in its manifesto, committed to ensure an alignment macroeconomic policy with economic and social priorities in Manifesto by coordinating fiscal and monetary policy mandates, including interest and exchanges rates, towards supporting balanced and sustainable growth as envisaged in the Constitution. Where necessary, this will require an expansionary fiscal policy.
An expansionary fiscal policy is an increase in government spending in real terms to increase the public investment in the economy which also contributes to the aggregate demand.
The ANC government has embedded a fiscal framework which allocates over 60% of the budget allocation for the social wage, to tackle poverty and inequality. Our progressive taxation system has funded the expansion of schools, clinics, hospitals, roads, bridges, universities, TVET colleges, water infrastructure, houses and advancing the Black Economic Empowerment policy for redress.
A budget deficit is not an anomaly. We should also note that financing of any countries economy entails the use of debt to fund the economy in line with the capacity of the economy to and market to withstand various risks which can undermine the financial sustainability of the fiscal position of government.
The ANC in its Manifesto has placed the creation of jobs as a number one priority, in order to respond to the high levels of unemployment which significantly impact the youth and women. Our commitment is to expand public employment programmes which target unemployed youth, unemployed graduates, and those above 25 years who acquire skills and training opportunities which help them get decent jobs and create economic opportunities for themselves. The ANC has prioritised the development and implementation of an integrated industrial strategy to build our industries to achieve an inclusive economy, to transform our economy, government needs to drive industrial growth, innovation and job creation.
The growth of our economy requires increased public and private investment in the real economy to create job opportunities for the unemployed. We must state that the financialization of the South African economy and the lack of capital allocation in the manufacturing sector, and other productive sectors of the economy. The level of capital adequacy of our financial sector is adequate to resource our development and growth needs. The ANC has resolved to look into various channels to leverage our financial markets and assets to direct them in the real economy. The ANC is focusing on ensuring that the banking sector focuses allocating credit for productive investments and to support small business and micro businesses to ensure we support marginalised persons to be active in the mainstream of the economy.
The growth of our economy will not be realised without increased spending by government, therefore the motion we debate today should not create a wrong correlation of whether growth and job creation is exclusive of the ability of government to spend which requires taxation and usage of debt. This is a flawed assertion in the motion, but we agree that it is through redistributive economic growth that we will close the fiscal deficit, but a fiscal deficit in itself is not regressive.
South Africa is not in a fiscal crisis, and we believe that the ANC in the Government of National Unity in the National Executive and Parliament will take decisions on various policy options in the interest of the people. Our commitment to provide social protection for the disadvantaged and poor and our resilience as a nation to adapt and transform conditions for an equitable society.
We continue to have the highest unequal society in the world. We therefore have a duty to ensure the redistribution of assets and this requires government to consider alternatives such as the wealth tax, through various mechanisms such as a dividend tax, estate duty tax, increasing tax for high income earners, reviewing forgone tax through subsidies based on a balance of evidence, and also utilising reserves and low cost bonds through monetary policy transmission instruments.
We are confident that we will together working with the workers, government, business , civil society and our global and continental relations increase opportunities of growth and transformation.