Ntsiepe Masoetsa
While delivering his state of the nation address in parliament, president Jacob Zuma identified the national development plan as a vision for the government for the next twenty years. He admitted, however, that achieving the envisaged goals in the past proved difficult due to global economic recession. The state of the nation address is generally viewed as an assessment of government performance and an indication of where resources would be invested to attain set goals. The finance minister’s budget speech normally reveals in more detail where these resources will be allocated.
Efficient Group chief economist Dawie Roodt predicts government is likely to continue spending on infrastructural projects.
"I also have a suspicion that we could see increases in tax because the president said the government has commissioned studies into current tax policies," warns Roodt. This to ensure that government has sufficient revenue to support public spending. In this respect Roodt expects sin taxes as well as personal income taxes to increase. The president also made it clear that more money would be spent on the national health insurance as well as on the salaries of the civil service starting with the teachers.
However, Roodt says with the rate of economic growth revised down to 2.5%, it means the minister of finance has less resources in his hands. "I think the mistake that the president has made is not telling us how he is going to grow the economy – he only tells us how much money he is going to spend," says Roodt.
