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State spending cuts, higher taxes doing more harm than good, Parly told

The coalition, an alliance of about 20 civil society organisations was among labour, economists and lobby groups who gave feedback on the Mid-Term Budget Policy Statement at Parliament on Wednesday.

Finance Minister Tito Mboweni at a media briefing after delivering the Medium-Term Budget Policy Statement in Parliament on 30 October 2019. Picture: @TreasuryRSA/Twitter

CAPE TOWN - The Budget Justice Coalition has warned that austerity policies, like state spending cuts and higher taxes, won’t dig the economy out of its difficulties and could harm low-income households.

The coalition, an alliance of about 20 civil society organisations - including Section 27 and Equal Education - was among labour, economists and lobby groups who gave feedback on Finance Minister Tito Mboweni's Mid-Term Budget Policy Statement at Parliament on Wednesday.

Speaking for the Budget Justice Coalition, Section 27’s Daniel McLaren said trying to balance the budget by slashing government spending and raising taxes did more harm than good.

“The fiscal framework and macro-economic proposals contained in the [mid-term] budget statement resemble those of austerity policies. We explain in our submission how austerity policies have failed internationally to bring about benefits either in terms of economic growth or in reducing the deficit or debt.”

The coalition argues that austerity leads to rising unemployment and falling income and that women are affected the most.

McLaren said there was room in the fiscus to avoid cuts to social spending.

“We show that from 2014/15 when expenditure ceilings were reduced significantly by tens of billions of rand each year, this has had a negative impact on demand in the economy, on public investment, on gross fixed capital formation and this is hampering our economic recovery.”

Submissions to Parliament’s Standing and Select Committees on Finance included one from the Pietermaritzburg Pensioners’ Forum, appealing for a living-wage old-age grant of R2,500 a month and a 13th cheque in December.

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