By Daanyaal Matthews
Finance Minister Enoch Godongwana has been under increased criticism since the reversal of the VAT decision, with his position worsened following the recent judgment of the Western Cape High Court that sided with the DA and EEF against the recently passed budget vote.
The finance minister has been chiefly criticized by the Economic Freedom Fighters, with its leader, Julius Malema, calling for his resignation.
Speaking on VOC Newsbeat, Professor Waldo Krugell, Professor of Economics at Northwest University School of Economics, argued that the finance minister had failed to ‘read the room’ by trying to push through the VAT increase.
“What was required was some political feeling that this is not a workable solution and South Africans are against it. Even if the letter of the law allows it, the spirit of such an increase is simply unworkable. I think that was a misstep on his side,” stated Krugell.
Krugell further contended that he believed the minister had previously showcased good temperament for his position, given his hardened stance towards state-owned enterprises and resistance to unnecessary expenditure. However, he maintains that the gravity of this decision throws into question his future.
“I think the minister has done a good job in the past few years by resisting spending pressures, and having a tougher stance towards SOEs, those were all good economic policies. But he underestimated that South Africans—after years of misspending—are really united in a tax revolt, so any notion that taxes would go up simply wouldn’t fly,” added Krugell.
The situation for National Treasury and the Department of Finance is ever more precarious, as they would now have to find a means of supplementing the fiscus without a tax increase. Krugell theorizes that cuts have become necessary to better assist the situation.
“We are now at a point when it would be really useful to prioritize something, so we should be asking, do we really need to look at our government departments and ask if they’re really necessary towards growing the economy,” stressed Krugell.
Listen to the full interview here:
