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ANC’s Mashatile warns against raising taxes, expropriation without compensation

Fin24

27 August 2021

S’thembile Cele

  • ANC treasurer-general Paul Mashatile has urged government to accelerate spending on infrastructure to create jobs.
  • He cautioned against raising taxes to fund additional welfare benefits.
  • Mashatile also revealed that the ANC may have to scrap its plans for expropriation without compensation.

A top South African governing party official urged the government to accelerate spending on infrastructure to create jobs and cautioned against raising taxes to fund additional welfare benefits.

“We have a lot of infrastructure that needs to be fixed, the rail lines, some provinces’ dams, road and bridges,” Paul Mashatile, the treasurer-general of the ANC, said in an interview on Thursday. “That is where jobs are going to come from.”

Mashatile’s comments come amid an ongoing debate in South Africa on how best to revive the coronavirus-battered economy, reduce a 34.4% unemployment rate and tackle rampant poverty and inequality. A recovery plan unveiled by President Cyril Ramaphosa in October last year envisioned the government allocating R100 billion for new infrastructure within four years, spending that would galvanise a further R1 trillion of private investment.

Mashatile, 59, a former premier of the central Gauteng province who’s been touted as a possible successor to Ramaphosa, said the implementation of the plan had to be accelerated, and newly appointed Finance Minister Enoch Godongwana would make that a top priority.

Luring investment won’t be easy. Restrictions that were imposed to curb the spread of the coronavirus caused the economy to shrink the most in 27 years in 2020, revised data published this week by the national statistics agency showed.

Spending on infrastructure and fixed assets fell 14.9% last year, and business and consumer confidence are languishing at multi-year lows.

Last week, the Department of Social Development proposed that companies and workers be compelled to contribute as much as 12% of their earnings to a fund that could provide unemployment, retirement and disability benefits – an option rejected by business and labour groups. Civil rights groups have for years been campaigning for the government to introduce a social welfare grant.

“We do need social relief for the poorest of the poor, but we also need a funding mechanism that is sustainable that will not exhaust those who are already contributing,” Mashatile said. “We will be cautious looking at that. It may not be something we do immediately.”

Mashatile also revealed that the ANC may have to scrap its plans to change the constitution to make it easier for the government to seize land without paying for it and address racially skewed ownership patterns.

An amendment would require backing from two-thirds of lawmakers, meaning the ruling party would need the support of the radical Economic Freedom Fighters to pass it, but an agreement on the wording has proved elusive so far.