NUMSA SUBMISSION ON THE 2018/19 FISCAL FRAMEWORK AND REVENUE PROPOSALS TO THE JOINT MEETING OF THE STANDING COMMITTEE ON FINANCE AND SELECT COMMITTEE ON FINANCE 1
Introduction Affiliated to the South African Federation 360 000 members, A worker controlled of Trade Unions (SAFTU) Union. NUMSA A Marxist Leninist union: Numsa refuses to remain silent on the neoliberal Numsa Sectors: Automotive, Tyre, Motor, Government policies, especially its Steel & Engineering, Mining & promotion of privatization and its failure Constructions, SOEs (Eskom, SAA, to end mass poverty, unemployment and Transnet etc.), Chemicals, Batteries. inequalities in the country. 2
Socio-Economic Conditions facing the working class • The National Union of Metal Workers South Africa (NUMSA) is a class-oriented trade-union whose strategic objective is to achieve Socialism in South Africa. • We have championed the radical implementation of the Freedom Charter as the basis for advancing the National Democratic Revolution in South Africa. • We have witnessed a Job blood bath in the sectors which we represent and have fought hard for the survival of these sectors. • Post 1994, the majority of black and African working class continue to suffer inferior racist colonial wages incapable of taking care of their families or meeting their most basic needs. We are denied basic social amenities and are subjected to inferior education and substandard housing. 3
Socio-Economic Conditions facing the working class • The average wage of an African worker in this country is a poverty wage incapable of sustaining life. • The expanded unemployment rate of 36.3%, extreme inequality and countrywide poverty in a climate of rising food prices. • Approximately 30.4 million members of the working class live in poverty, over half of the South African population live on an income less than R992 per month. The majority of these are the African working class. • Only 43% of the working age population are employed. • According to StatsSA, 3.1 million (29.7%) of the 10.3 million young persons (15-24 years) were not in employment, education or training by the end of 2017. Between Q3: 2017 and Q4: 2017, the number of discouraged work-seekers grew by 103,000 (or 4.2%) to 2.5 million persons. 4
Socio-Economic Conditions facing the working class Source: StatsSA, 2018 5
Reflection on Government Policies • It is clear that the current ANC government is in pursuit of more diligent, effective and ruthless neoliberal capitalist policies with no concern of how it is going to impact on the lives of the working class. The neoliberal materialist culture of grotesque inequalities, conspicuous consumption and corruption is continuing unabated, in the post Zuma presidency. • The South African government is leading the charge in watering down workers rights by more flexible labour market policies which will only benefit those who own factors of production, in particular the owners of capital. • The government is currently attacking the working class by changing legislation to limit the right to strike. • The new labour proposals will include clauses which give the state the power to end a strike – taking away the constitutional rights of all workers to withdraw labour. 6
Reflection on Government Policies • Attempts to control the democratic functions of a union and to interfere with Union mandates are the thin end of the wedge. This is an attempt to undermine workers power. • The class collaborationists are also engaged in a proposal to set the National Minimum Wage at an insulting R20 per hour, and they call this a breakthrough! By their own admission, the government has now had to admit that almost 50% of workers are earning below R990 p/m. That is a shocking admission from a Government that claims to be on the side of the poor! • NUMSA and many other democratic unions have learnt from bitter experience to always ask a simple question when different factions are engaged in a battle as witnessed with the ANC electinve conference: ‘What are the interests of the Working Class in this fight? 7
What the Fiscal Framework means in real terms In a racist colonial economy and society like South Africa, it is impossible for the African working class to expect the Budget to be premised on the absolute principle that government priorities and spending must at all times be fundamentally geared towards reducing unemployment, poverty and inequality. The foundations of the racist and colonial South African economy remain intact. So called neoliberal fiscal discipline and liberalized markets will remain the bedrock of government economic policy and will not be compromised in favour of a developmental trajectory that seeks to redistribute wealth and restore the resources of our country to common or public ownership. 8
What the Fiscal Framework means in real terms • It seems highly unlikely that consumption growth will be that high given the tax burden placed on the working class this financial year. All the tax proposals are affecting the purchasing power of the black and African working class rather than on companies. • This is reflected in the detrimental, ripple effect on especially the Black and African working class of the 52-cents increase on the fuel levy and the increase of VAT to 15%. • The fuel levy and Road fund levy increases will affect not only those travelling by car or taxi. These levy increases will affect the cost structure of transport and logistical companies that are delivering food, clothes, appliances and other goods. • Hence, these items might also experience a spike in prices, and subsequently, working class consumers will be negatively affected. 9
What the Fiscal Framework means in real terms • All the proposed increases are coming at a tine when working class families are still trying to cope with the unacceptable 5% increase in Eskom tariffs. • The progressive social grant increase of the Old age grant by R90 in April and R10 in October will do very little to cover the harm that would be caused by the hike in VAT. Similarly with the Child support grant increase of R400 (April) and R410 (October). • We cannot continue to celebrate the fact that about 11 million people are on social grants. This simply shows that this government has dismally failed to transform the lives of the poor. • National Treasury has been driving neo-liberal economic policies which have failed to achieve economic development. They are driving austerity measures instead of stimulating the economy. 10
TAX REVENUE 2018/19 R505.8 bn Personal Income Tax R348.1 bn VAT R77.5 bn Fuel Levy R231.2 bn Corporate Income Tax R97.4 bn Customs and Excise Duties R 84.8 bn Other • Nearly a trillion rand of the tax burden comes from the working class, while White monopoly Capital remain untouched. • This is in a country where 95% of the wealth is in the hands of 5% of the population. • This increasing tax burden will force the majority of Black and African working class families to rely on unscrupulous money lenders and loan sharks in order to make ends meet. • The state failed to provide funding for free education, now they want to punish the working class and the poor by making them pay for it. 11
Economic Reforms • Only a Socialist state, led by the working class can drive an agenda to nationalize the commanding heights of the economy in the interests of the working class majority. • This must be done in order to access the resources we desperately need for free education, free quality healthcare and quality housing. Local Market Optimisation NUMSA firmly believes that the starting point for the growth of the local market is the development supportive macro-economic policy that drives industrialisation as a core economic imperative. • Industrialization must be driven by basic human needs, not profit. • At a macro-level, radical changes to economic policy need to take place in order to effectively deal with the triple crisis of poverty, unemployment and inequality. 12
What is to be done on Tax? • Do not implement the 1% VAT increase • Increase corporate tax to reflect inequality in SA, i.e. 95%of the wealth is in the hands of only 5% of the population. • Prioritize compliance of tax dodgers. SARS should decisively deal with tax avoidance by big corporates. There should be clear legislation that deals with sophisticated crimes done by White Monopoly Capital to avoid illicit financial outflows, base erosion and profit shifting. 13
What is to be done about SOE’s? • SOE’s must be the catalyst for driving industrialization. We reject any attempt to privatize SOE’s . • The mandate of all SOE’s must be changed from profit making to responding to the needs of the working class majority. i.e. Eskom should electrify homes instead of chasing revenue. • There must be transparency on how the new boards are elected in SOE’s, particularly the new Eskom board. • NUMSA demands that there must be reconstitution of the SOE’s boards so that all social partners, labour, business, civil society and the state are represented to ensure accountability. • We demand free electricity for the working class and the poor, and affordably priced electricity for industry. • Government must nationalize coal mines so that they must supply the national grid with cheap quality coal. 14
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