DA Proposes ‘Alternative’ Budget for South Africa: No Tax Hikes, Cuts to Reckless Spending

As South Africa’s Government of National Unity (GNU) debates the 2025 budget, the Democratic Alliance (DA) has proposed an alternative plan that avoids tax hikes while addressing the country’s fiscal challenges. The DA’s proposal focuses on cutting “reckless” government spending, improving tax compliance, and prioritizing economic growth—a stark contrast to the initially proposed VAT increase and other tax measures.

The Budget Debate: Why the DA Stepped In

Finance Minister Enoch Godongwana’s original budget proposal included a controversial two percentage point VAT hike, raising the rate to 17%. This move was intended to generate an additional R68 billion to fund critical areas like education, healthcare, and social grants. However, the proposal faced strong opposition from GNU partners, including the DA, forcing the minister to shelve the budget speech temporarily.

The DA, the second-largest party in the GNU, argued that tax hikes would further strain South Africa’s already burdened taxpayers and deter investment. Instead, the party proposed an alternative budget that reallocates funds from inefficient programs and wasteful spending to cover the R60 billion needed for government commitments.

Cutting Wasteful Spending: The DA’s Plan

The DA’s alternative budget identifies several areas where immediate cost-cutting measures could free up significant funds without compromising essential services. Key proposals include:

• Reducing Government Advertising Budgets by 50%: Slashing unnecessary advertising expenses.
• Cutting Travel and Catering Costs by 33%: Minimizing non-essential departmental expenditures.
• Implementing a 12-Month Hiring Freeze: Halting the recruitment of non-essential government positions.
• Auditing “Ghost Employees”: Following the PRASA model, which uncovered 10% of its workforce didn’t exist.

According to Dr. Mark Burke, the DA’s spokesperson on Finance, these measures alone could save at least R60 billion. “South Africa doesn’t have a revenue problem; it has a problem prioritizing spending on programs that drive growth and job creation,” he said.

Pro-Growth Measures: Unlocking Economic Potential

Beyond cutting costs, the DA’s plan emphasizes pro-growth strategies to stimulate the economy and create jobs. Key initiatives include:

• Fast-Tracking Logistics and Trade Reforms: Setting clear deadlines for privatizing freight rail and major ports like Cape Town and Richards Bay.
• Securing a $5 Billion World Bank Loan: Funding high-impact urban infrastructure projects without adding to national debt.
• Conducting a Comprehensive Spending Review: Identifying and reallocating funds from failing programs to essential services like healthcare, policing, and education.

Increasing Revenue Without Raising Taxes

The DA’s proposal also focuses on boosting revenue through improved tax compliance and unlocking underutilized state assets. Key measures include:

• Improving Tax Compliance: Increasing compliance rates from 63% to 67% could generate R60 billion annually.
• Selling State-Owned Land and Properties: This could raise an additional R10 billion per year.

These measures align with recent comments from SARS Commissioner Edward Kieswetter, who highlighted the need to recover R800 billion in owed taxes.

Protecting Essential Services

The DA’s alternative budget ensures that critical services remain untouched. There would be no cuts to frontline healthcare workers, teachers, SAPS personnel, or social grants. Additionally, the party proposes converting the R370 SRD grant into a Job Seekers’ Allowance, linking it to employment-seeking efforts rather than treating it as a handout.

With the GNU cabinet still debating the budget, the DA’s proposal offers a viable alternative to tax hikes. However, the path forward remains uncertain. National Treasury faces the daunting task of balancing the budget while addressing South Africa’s pressing economic challenges.

The revised budget is now scheduled to be tabled on 12 March. Whether the DA’s proposals will be adopted remains to be seen, but one thing is clear: South Africa’s fiscal future hinges on difficult choices and bold reforms.

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