Tag: ANC

How the ANC broke Eskom

Source: MyBroadband

Eskom was once so successful that it was supplying more than half the electricity in Africa.

However, years of corruption, incompetence and political meddling has brought Eskom to its knees, and it is now begging for bailouts to stay afloat.

The company’s growing debt burden, which already exceeds R400-billion and can grow to R600-billion in the next three years, means it is technically bankrupt.

So bad is the situation that former Finance Minister Nhlanhla Nene said Eskom is the single biggest risk to South Africa’s economy.

The image below provides an overview of how Eskom changed over the last 10 years:

Image credit: MyBroadband

Government adopts land expropriation report

By Gaye Davis & Babalo Ndenze for EWN

South Africa’s taken the first step towards legislating for the expropriation of land without compensation, but there is a long road ahead before it becomes law.

Parliament’s constitutional review committee has adopted its final report, which recommends that Section 25 of the Constitution, the property clause, be amended to make expropriation without compensation explicit.

The report is expected to come before the National Assembly for debate and adoption in two weeks’ time.

Parliament is expected to debate and adopt the committee’s report at the end of November, but that’s just the start of a lengthy process to amend the Constitution, which could also face legal challenges along the way.

A parliamentary committee will then have to draft and process what will be the 18th Constitution Amendment Bill.

That’ll involve a fresh round of public participation and comment.

Given some parties’ and civil society organisations’ opposition to amending the Constitution, legal challenges could delay the process.

Parliament’s schedule also makes it unlikely the bill will be voted on before next year’s elections.

A final hurdle is that any constitutional amendment that affects the Bill of Rights requires a much bigger than a normal majority to pass.

Constitutional review committee co-chairperson Stan Maila said: “If you want to change anything in Chapter 2 (which deals with the Bill of Rights, and is where Section 25 appears), then you need a two-thirds majority vote in the National Assembly and six (of the nine) provinces (backing it) in the National Council of Provinces.”

At the same time, the ANC has made it absolutely clear that there’s no chance of a constitutional amendment before next year’s elections, as stated in the committee’s adopted report.

The EFF, which voted with the ANC, has also called on the amendment to be finalised before the end of the current term.

Committee member Vincent Smith said: “What is very clear is that there will be no voting on the actual constitutional amendment before elections, I hope that clarifies it. There will be no voting on it, it’s just not practically possible.”

The ANC has also dismissed opposition accusations that the party and EFF are using land expropriation as an electioneering ploy.

“Is this a sham for electioneering purposes? It’s not, because people who understand know that the process of actually amending the Constitution is not going to happen until after the elections,” Smith added.

The party added that the adoption of this final report will bring about an end to policy uncertainty while also addressing historic wrongs.

By Penwell Dlamini for Sowetan Live; BusinessTech

Gauteng residents may have to wait for some time before clear word comes through on what should happen to the failed e-tolling system in the province.

Gauteng premier David Makhura tried unsuccessfully to explain to the legislature when the controversial system would be scrapped.

DA provincial leader John Moody asked Makhura when the gantries on Gauteng highways will be switched off and if those who have paid their e-toll bills will be refunded.

In his reply, Makhura said the matter is with national government and the ANC in the province would continue its campaigns for the scrapping of e-tolling.

A recent article in BusinessTech said that in an interview with Talk Radio 702’s Karima Brown, the deputy chairperson of the ANC in Gauteng, Panyaza Lesufi, avoided the question of how Gauteng’s roads will be funded and maintained going forward, instead stating that the province first needs to “let go” of the current system.

The ANC had previously stated that the controversial e-tolling system should be scrapped.

“The e-toll matter has now been referred to national government. The president [Cyril Ramaphosa] was there when we made call that e-tolls in this province …must be scrapped. We made that point at the ANC conference. We did not say the e-tolls are scrapped. [The issue of e-tolls] is at national government, which is now responsible for this matter.

“We as the ANC are going lead a campaign [against e-tolls]. There is no contradiction between the ANC taking up [national government]. There is no contradiction in that. We have been doing that all the time…I will lead the march to the Union Buildings. There is no contradiction in that. It will not be the first march to the Union Buildings. We are going to continue to lead in ensuring that the e-tolls become a matter of yesterday,” Makhura said.

At their recent provincial conference, Gauteng ANC members reiterated their position calling for the scrapping of e-tolls.

But the EFF is rejecting the ANC’s statement, saying the ruling party is raising the issue simply to appease voters.

“It is now going to be elections, you are starting again with this thing of yours with e-tolls. Leave the e-tolls alone. You have failed to scrap it. It is like your mother party [the ANC]; every time we go to elections, they start changing their tone with the land issue…All I am saying is that please do not fool us and try to tell us that you will do something about e-tolls. People of Gauteng must never pay e-tolls and we are not going to pay them,” said EFF MPL Ntobeng Ntobeng.

Makhura could not give any indication when national government would make its final decision on what should be done with e-tolls.

Types of land the ANC may expropriate

By Phillip de Wet for Business Insider SA 

There is no detailed policy on land expropriation yet, but the political drivers behind it make it possible to predict what kind of properties may be first in line.

Land owned by parastatals in cities is high on the list, as is abandoned buildings in city centres.

Productive farms also feature – but lower down, under particular circumstances, and possibly with real value paid for the land.

The ANC fully intends to change the Constitution to speed up land reform and make expropriation without compensation easier – and there are things the ANC could “implement immediately”, the party says.

It is not yet clear just exactly what that means. How will bank bonds over expropriated property be handled? Does the ANC have a plan for dealing with legal challenges based on the fundamental principle that state action cannot be arbitrary?

But the very fact that those questions remain unanswered show that President Cyril Ramaphosa’s late-night speech on Tuesday was driven by political necessity, experts say, not least of all elections coming up in 2019.

And that actually helps to predict what kind of property is likely to be expropriated. Here are the predictions for what the government will likely target first, with or without compensation.

Urban land owned by state companies such as Transnet and Eskom
Plots of land owned by state-owned enterprises (SOEs) in cities such as Cape Town – especially those that are partially undeveloped – could make for some quick expropriation wins, says Ruth Hall of the Institute for Poverty, Land and Agrarian Studies (PLAAS) at the University of the Western Cape.

“Well-located land in cities will be crucial, and there is a lot of that owned by parastatals.”

Eskom’s Megawatt Park headquarters, with its large open tracts and underused sports fields on the fashionable northern fringes of Johannesburg, is a good example, says Susan Booysen, director of research at the Mapungubwe Institute for Strategic Reflection (Mistra).

“It is centrally located, close to business opportunities and transport, just the kind of place people have been agitating for.”

And SOEs – especially ones as dependent on government debt as Eskom – are unlikely to fight back quite as hard as some private landowners, making for land that can be successfully and finally seized ahead of 2019 elections.

Abandoned, hijacked and unmaintained buildings in the city centres
The demand for cheap housing is acute in just about every city centre, and just about every city features abandoned and sometimes downright dangerous buildings only nominally still in private ownership.

Expropriating such buildings as a faster alternative to, say, seeking to liquidate their holding companies for the rates and taxes owed to municipalities, will be politically palatable, and socially desirable. Such expropriations are also unlikely to face serious legal challenges – and make for lots of useful numbers: high potential property values, high number of people who can be housed, large amounts of floor space, and other metrics that come across well in billboard-style advertisements.

The only question is what happens to the municipal debt associated with such buildings.

Land hosting – and adjoining – current informal settlements
“Expropriation is a mechanism for breaking [a] deadlock,” says Hall. “Whether or not you compensate is a different matter.”

And deadlock is the situation on land under and around some current informal settlements, where the title-holders have abandoned any pretence to control the land, but are hanging on to it because there is some small hope of cash down the line.

That hope dwindles fast after a change to the Constitution and a firm promise by the government to expropriate land without paying anything for it – and could make owners willing, even eager, to take whatever they are offered.

Abandoned mines and mine dumps
Unused mining land is very likely to be in the expropriation mix, says Booysen, especially if there is a prospect of reopening a mine, and so resurrecting jobs and broader economic opportunity.

Mineral resources minister Gwede Mantashe is very keen to keep mines out of care and maintenance, with his department stepping in to find buyers for assets others no longer want.

Expropriating shuttered mines would be a warning to companies who wish to keep “care and maintenance” shafts on their balance sheets. It would also make a strong political statement.

Smallholdings, especially abandoned or unused but agriculturally-promising ones
There is a need, at least politically, to expropriate land that can be farmed. Yet the ANC seems genuinely keen to not disrupt food production or the economy, and there are more voters in peri-urban areas than rural ones.

This, says Booysen, all suggest that unused or underused smallholdings on urban fringes will draw the eyes of expropriators.

The fact that such land is better suited to subsistence-level agriculture, because of proximity to markets and services, is a bonus.

Portions of farms long worked, for their own gain, by tenant-workers
KwaZulu-Natal and Mpumalanga in particular feature farms where generations of tenant-workers have worked some of the land for their own account, says Hall.

That is one area where the government may face an early confrontation with private owners, but also an area where compensation is likely to be carefully considered, with factors such as the value of the land, debt to banks, and provenance of the land coming into play.

By Siviwe Feketha for IOL; HuffPost 

In an unbelievable development, the ANC says it is “shocked” by the scale of corruption in government. In a document called “ANC briefing notes: key ANC politicies and government programmes”, reportedly prepared for the 2019 election, the party notes that there has been an increase in corruption despite the creation of crime-fighting institutions.

According to The Star, the document says, “The [past] year has revealed many new cases of corruption, and like all South Africans, we are shocked by the scale of corruption and the allegations of state capture, which we are determined to root out.”

South Africans, however, were not so shocked. Or, rather, they were shocked, just not for the same reasons as the ANC.

The ANC is reportedly “shocked” by the scale of corruption in the state, and has conceded that despite setting up mechanisms to combat graft, “powerful individuals” had managed to loot government coffers.
The governing party has vowed to take a tougher stance on corruption as part of its election campaign, with measures including subjecting public servants and senior politicians to lifestyle audits.

This is contained in a document titled “ANC briefing notes: key ANC policies and government programmes”, prepared for the elections in 2019.

The party held an elections workshop at the weekend in Irene, outside Pretoria. The workshop was tasked with crafting the party’s election manifesto, which will be used to drum up support for the general elections when the party faces its biggest contest since 1994, with good governance and the land issue set to be the main themes for their campaign.

In the document, the ANC admitted that in spite of creating institutions such as the Hawks and the Special Investigating Unit, there has been an increase in corruption cases.

“In spite of these efforts, powerful individuals have managed to loot government resources. This goes against every value and principle the ANC fought for.

The ANC said it was determined to root out corruption because it undermined service delivery.

“We will use Parliament, commissions, investigators and the courts to get to the bottom of the problem and deal with the offenders. As the ANC, we will take strong action against any of our leaders guilty of corruption.

“It is unacceptable that parts of the state have been used to serve personal interests,” the party stated.

Power utility Eskom, rail company Transnet, arms manufacturer Denel and the Passenger Rail Agency of SA (Prasa) are among a number of state-owned companies that fell prey to the looting spree.

The party is now pushing for the strengthening of the Special Investigation Unit to boost the investigation of corruption in the public service.

“The corruption and state capture inquiries in Parliament in 2017 and 2018 addressed misspending and looting at state-owned companies and departments. In the first few months of 2018, the boards and top management were replaced at Eskom, Transnet, SAA and Prasa to start the clean up.

“Many of the offenders will be prosecuted. Ministers responsible for departments involved were also replaced,” the party noted.

“There are court cases, disciplinary processes or investigations into the conduct of many of those who were meant to protect us from corruption – among them senior prosecutors, police and investigators, Sars, intelligence agencies and politicians,” the ANC said.

As part of its vision for 2030, the ANC aims to improve the capacity of senior managers in government through assessment and ongoing training. It will also subject senior public servants to lifestyle audits.

The party said it was not for sale, and that those who donate to it should not expect tenders in return.

Delivering his keynote address at the workshop, President Cyril Ramaphosa said South Africans were not despondent, as they have seen the swift action taken by the government since he took over.

“They see the work we are doing to end state capture and corruption, and to restore our state-owned enterprise to financial and operational health. Many of our people have become actively involved in the debate on land reform and the measures taken to urgently accelerate land redistribution and drive the agricultural revolution they want to see,” he said.

On land reform, the ANC has admitted that its government had failed to effectively deal with the land question, since it took over the reins of government in 1994, adding that expropriation without compensation would be used to help address dispossession of black people.

The party said instead of paying for land – which was expensive – the state had to help new farmers with financial support, as they often failed and sold their land back to the whites.

“Since 1994 we have implemented a policy of land claims and land reform to reverse the apartheid injustice. There has been very slow progress and the patterns of the past have not really changed. Land has been expensive to buy and we spent more than R50billion on land reform.

“New farmers who have benefited from land claims or land reform find it difficult to farm profitably without access to water rights, loans and technical support,” the party said.

The party has, however, rejected the EFF’s proposition that all land be nationalised, including current land occupations across the country which the red berets have endorsed.

“The ANC wants change but we want most of our land to belong to the people, not the state. We believe in a mix of private land ownership and communal or state ownership, where it makes more sense to go that route,” the ANC added.

It warned that land allocation would soon be dominated by crime syndicates, if illegal land invasions were allowed to continue.

 

By Herman Mashaba for News24

ANC politicians that once ruled the City of Johannesburg have to count among the greatest illusionists of modern times.

This is because they successfully managed to fool millions of residents in the city into believing that, despite clear evidence witnessed daily of below par service delivery, the ANC in Johannesburg was somehow better than their counterparts around the country.

People were duped into the belief that the City worked better than others, even if it was far from perfect.

Why not, right?

After all, ratings agencies, other government agencies and the commentariat also bought into the idea.

Who can really blame residents of the city, and everyone else for that matter, when R300m was being spent in a single year on self-promoting marketing?

What was Parks Tau and company doing spending the sort of money usually spent by JSE-listed blue chip companies on marketing and advertising?

The sad thing is that this was all public money from which the same public derived little or no benefit.

You must remember the volume of billboards across the city depicting perfect services. You must surely remember the radio advertisements – it was actually a feat to miss them. You must remember the full page spreads in the papers.

All of this depicting the Utopian ‘World Class African City’ which was markedly different from the lived experience of the residents of our city.

The leadership of Parks Tau and the ANC was obsessed with this manufactured image, mostly to fulfil their status in the many international bodies where they spent their time.

Tau now travels the world as President of the United Cities and Local Government; no doubt a consolation prize for the good job he did in pulling the wool over the eyes of even the international community.

However, upon entering office, we started to gain an understanding of the full magnitude of the historical failures that lay behind the billboards, radio adverts and newspaper spreads.

We began to understand that the previous ANC regime was all style over substance. They proved that not all that glitters is gold.

Since walking into office, it has become imperative that we must work together with our residents in turning the city around. Part of this, requires the common understanding of the scale of the issues we are required to overcome.

It also requires an appreciation that residents will not always be bombarded with self-praising advertisements and that this does not mean that the DA-led government is not working.

It’s precisely because we are working that you do not always see us as much as you would like.

If we do not share this understanding, we will fail to partner as residents, business and communities to turn Johannesburg into a city of golden opportunities.

Meanwhile, a R12bn backlog in our roads has arisen from years of under-investment in our road network. Between 2013 and 2017, 3964 km of the road network (32%) fell into the condition categories poor and very poor.

A R56bn backlog in our storm water drainage exacerbates the roads problem. Water running down the roads, with nowhere to go, damages the road structure and increases potholes.

Anyone who has driven since the recent heavy rains two weeks ago will know exactly what I am alluding to. It is estimated that the city has more than 100 000 reported potholes in the road network.

Our electrical infrastructure is no better.

Over 27% of our bulk transformers now operate beyond their useful lifespan, built between 1927 and 1970.

In the instance of the inner city, it is powered by a sub-station that is over 70 years old and only one man alive today knows how to service its parts. Our electrical infrastructure backlog sits at a staggering R65bn.

Our water network can be likened to that cartoon character with their fingers and toes plugging the leaks of a ship. The 2016/17 data, which is two years old, shows that the water network inherited suffered from 45 000 leaks per year. This in a situation where we know water will be a challenge in the future.

Our housing backlog stands officially at 152 000 people on our lists, and a demand for 300 000 City produced housing opportunities.

Incidentally, the R17bn of fraud and corruption under investigation would have been enough to build houses for all of these people.

The unofficial backlog, including those in the ‘missing-middle’ of the housing market, is much, much larger. It manifests in the legacy of landlessness, illegal land occupation and frustration in our communities.

This is something I do not understand, despite wracking my brain over the issue for the last 18 months.

How could a city have been run down to this extent, allowed to deteriorate, when the link between infrastructure and economic growth is so widely accepted around the world?

We have over 900 000 unemployed people living in Johannesburg. These people were failed by successive ANC governments which failed to look to the long-term future of those they claimed to be serving and the many more that stand to join them unless something drastic is done.

I do not raise these issues to settle down into a morbid state of depression.

Our plans that we are launching are designed to institute long-term investment into these infrastructure priorities. We will achieve a level of investment into critical infrastructure which will work towards turning the picture around, and not just plugging the leaks, so to speak.

This is why I say that this is the greatest lie hidden from the residents of Johannesburg.

They were never told about the trade-offs that were made which produced these kind of backlogs. In all of those rosy public consultation meetings, our residents weren’t told government would trade future jobs in exchange for fanciful projects.

Our residents were told that international reputation and prestige would come before houses, roads, electricity and water. Our residents were not told any of these things.

The road we will begin travelling down as a City, is going to transform ours into a city of golden opportunities; a city where infrastructure works, the economy is growing and more people are being employed.

What remains critical in this process is that we embark on this journey together, knowing we have been misled, that we have a mountain to climb, but that government has the will to do it for the first time.

– Mashaba is executive mayor of the City of Johannesburg

Even before being elected as South Africa’s new president, Cyril Ramaphosa was a people person, joining some for walks, and then jogging along Sea Point promenade. He is clearly liked, but for how long will that honeymoon last?

Coming after the extended period of uncertainty in South Africa resulting from Jacob Zuma’s reluctance to resign, Cyril Ramaphosa’s first State of the Nation address restored dignity and decorum to Parliament, and pressed all the right buttons.

He was gracious to all (even giving thanks to Zuma for facilitating what the ANC has termed “the transition”), before launching into the delivery of a peroration which proclaimed the breaking of a new dawn. South Africa’s “moment of hope”, which was to be founded on the legacy of Nelson Mandela, had returned.

Ramaphosa combined extensive tribute to the heroes of the ANC’s liberation Struggle with the gospel of social inclusion according to the holy writ of the Freedom Charter. This was time to move beyond the recent period of discord, disunity and disillusionment.

The speech was delivered with panache and confidence. It had style, declaring to the nation and the world that he, Cyril Ramaphosa, was in charge.

But along with the style, there was the solid substance. The overall impression was that Ramaphosa intends to impose a new coherence and efficiency on government. Although acknowledging the calamity of the dismally low rate of economic growth, he was upbeat about the future, about the reviving fortunes of the commodities market, and the upturn in the markets.

Deservedly, Ramaphosa was to be allowed to enjoy the applause, as opposition members rose to their feet alongside the ANC MPs to give him a standing ovation which went far beyond ceremonial ritual. After the disaster of Zuma, it would seem to have given a massive fillip to South African pride and confidence.

It also gave the opposition parties a problem. With Zuma gone and a credible ANC president in place, they are facing an uphill electoral battle.

The new president committed to ensuring ethical behaviour and leadership, and to a refusal to tolerate the plunder of resources by public employees or theft and exploitation by private businesses. Critically, this would entail a transformation in the way that state-owned enterprises such as the power utility Eskom would be run.

There would be a new beginning at state-owned enterprises. They would no longer be allowed to borrow their way out of their financial difficulties. Competent people would be appointed to their boards, and there would be an appropriate distancing of their strategic role from operational management. And board members would be barred from any involvement in procurement.

This would all be part and parcel of a much wider reconfiguration of government, presumably a code for the reduction in the number of departments and a reduction in the size of ministerial ranks.

Ramaphosa also committed to hands-on government, promising he would be visiting each department over the forthcoming year.

The forging of a social compact between government, business and labour would define the new era. A part of it would come from a new presidential economic advisory council. There would be summits for jobs and investment; convening of a youth working group to promote youth enterprise and employment and a summit for the social sector to forge a new consensus with NGOs and civil society.

This would add up to the construction of a “capable state” to foster much needed economic recovery. There would be concerted efforts to promote and aid small and medium business and revive manufacturing. Stress was laid on the importance of arriving at consensus around a mining charter, a document designed to guide transformation in this industry.

Due reference was made to preparing South Africa to embrace the fourth and fifth industrial revolutions and the encouragement of scientific innovation and new technology. And there was an explicit undertaking from Ramaphosa that he would take personal responsibility to ensure social grants be paid. And “no individual person in government” would be allowed to obstruct social grants delivery, a brutal, albeit indirect, put-down of the minister concerned.

The one aspect of the speech which would have raised eyebrows among the Davos crowd was Ramaphosa’s re-iteration of the ANC government’s commitment to the expropriation of land without compensation as part of radical economic transformation. This highlighted the ANC’s proposed change to the constitution adopted at its recent national conference.

But that commitment was also fudged by linking any expropriation to ensuring agricultural production and food security. Cynics may argue that this was simply a form of words. In the context of Ramaphosa’s general investment seeking demeanour, agricultural capital and international business are unlikely to be unduly alarmed. But if they are wise, they will take it as a warning to come to the party of “social transformation”.

Ramaphosa has played a long game since he was passed over for president in the mid-’90s in favour of Thabo Mbeki. After playing a key role in crafting the constitution, he left politics, made a lot of money by spearheading the first round of black economic empowerment, and then returned to politics to play what must at times have been a mortifying role as deputy president under Zuma.

He suffered a great deal of criticism for being complicit in the Zuma-era corruption because of his silence – silence he would have reckoned was necessary to secure his rise to the top.

Clearly, Ramaphosa is not above criticism. He is no saint. He lives in the shadow of the massacre of miners at Marikana. Only towards the end of the ANC leadership race did he let fly against corruption and state capture.

Yet it could so easily have been so different. What would the mood have been now if Nkosazana Dlamini Zuma had won the ANC leadership?

Few would have been convinced that she would have been able or willing to leave the legacy of the corruption of the Zuma years behind. In contrast, although there is extensive acknowledgement that Ramaphosa will meet considerable opposition from within the ANC patronage machine if he is to realise his ambitions, he has indeed provided hope.

Yet the irony is that we need to pay due deference to David Mabuza, premier of the province of Mpumalanga.

If it had not been for his last moment tactic of throwing his provincial delegates’ votes behind Ramaphosa at the ANC conference to thwart a Dlamini Zuma victory at the ANC national conference, South Africa would be having to face a very different future.

In true ANC style, the irony is that the moment of hope was facilitated by someone who has been portrayed, even from within the party, as a political hoodlum.

By Roger Southall for The Conversation, published on IOL

In November 2017, the government announced additional steps it would take to reduce its budget deficit by R40bn in the 2018–19 financial year, through reducing expenditure by R25bn and increasing revenue by R15bn.

This was in addition to R15bn-worth of additional tax hikes announced in the 2016 national Budget and R31bn in additional spending cuts of R15bn and R16bn announced in the 2016 and 2017 national budgets, respectively.

The latest monthly government budget figures for December 2017 suggest revenues are likely to undershoot the February 2017 estimates by close to R50bn, broadly in line with the government’s estimates outlined in the October 2017 medium-term budget.

The value-added tax (VAT) rate in South Africa was last raised to 14% in 1993 (from 10%) and remains below that of a number of the country’s emerging-market peers. Moreover, South Africa’s narrow tax base makes the case for a rise in VAT over a further increase in personal income-tax rates. The Treasury’s tax statistics suggest about 1.7m taxpayers were responsible for 78% of all personal income tax collected in the 2016–17 financial year. This points to a tax base that is too dependent on a small number of individuals.

Although raising VAT is a more effective way of increasing revenues, it would be a controversial decision ahead of national polls in 2019. In Momentum Investments’ opinion, a number of alternative revenue-raising options to raising VAT exist at this stage (see the table below).

These include allowing for limited compensation for fiscal drag (the government was able to collect R12bn through this avenue in the previous fiscal year); removing the VAT zero-rating on fuel (this could raise up to R18bn but prove contentious, as the taxi industry is a powerful constituency within the ruling party); and raising sin taxes (on alcoholic beverages and tobacco). The government raised R2bn from the latter in the previous fiscal year.

Momentum Investments believes that raising the top marginal tax rate from 45% would hurt already fragile consumer confidence and subdued household spend. Similarly, the company does not expect a hike in the company tax rate (currently at 28%). Previously, the Davis Tax Committee alluded to a large gap between the headline and effective corporate tax rates in South Africa, suggesting a number of loopholes needed to be addressed before considering a hike in the company tax rate.

The government has additionally committed to implementing the health promotion levy (or sugar tax) by April 1 2018, which could raise an additional R2bn. Moreover, wealth taxes have been debated, but SBG Securities estimates this could raise between R5bn and R8bn at most. In its February 2017 Budget, the government highlighted it was refining measures to prevent tax avoidance through the use of trusts, which could boost revenue collection at the margin.

Wealth taxes have been debated, but SBG Securities estimates this could raise between R5bn and R8bn at most
Absa notes the government could consider removing the VAT exemption on municipal property rates to generate higher revenues. The February 2017 Budget showed this exemption amounted to R10.5bn in the 2014–15 financial year.

While previously the Davis Tax Committee acknowledged VAT as a potential source of funding for additional spending needs, such as the National Health Insurance scheme, recent comments made by the current health minister hinted at using medical tax credits as an alternative source of funding. The minister noted that 8.8m people belonged to a medical scheme. This could provide about R20bn in tax credits per year, which would be sufficient to cover the health ministry’s priority programmes (amounting to R69bn over four years).

Also, the Treasury published its Draft Carbon Tax Bill for public comment, open until March 2018. The actual date of the carbon tax has not yet been announced, but the Treasury noted it would be complemented by a package of tax incentives and revenue-recycling measures to minimise the effect on energy-intensive sectors in the first phase (up to 2022). The Treasury also said the effect of the tax in the first phase was designed to be revenue neutral, after taking the complementary measures into account.

Possible revenue measures
Fiscal drag: Intake – R12bn (last year); likelihood: very high probability
Fuel levies or VAT on fuel: Intake – R3.2bn (last year) or R18.2bn; likelihood: high probability
Sin taxes (alcohol and tobacco): Intake – R2bn (last year); likelihood: high probability
Sugar tax: Intake – R2bn; likelihood: bill passed and due for implementation
Wealth tax: Intake – R5bn–R8bn; likelihood: high probability – delays?
Carbon tax: Intake – initially revenue neutral; likelihood: high probability – draft bill out for public comment
Removal of medical aid tax credit: Intake – R20bn or R2bn (above R750,000); likelihood: moderate probability (higher in medium term)
Dividend withholding tax: Intake – R6.8bn (last year); likelihood: moderate probability (increased previously)
Taxing top marginal bracket: Intake – R4.4bn (last year); likelihood: low probability (steep increase previously)
VAT (0.5% increase): Intake – R11.5bn (last year); likelihood: low probability (higher in medium term)
Company tax increase: Intake – ?; likelihood: low probability (negative business sentiment)

(Source: Nedbank, RMBMS, SBG Securities, national Treasury, Momentum Investments)

While the revenue shortfall for the 2017–18 financial year is in large part due to lower growth outcomes, lower tax buoyancy rates (tax revenue growth per unit of gross domestic product growth) exacerbated low revenue outcomes.

Media reports have suggested the hit to institutional credibility at the South African Revenue Service has negatively affected personal and corporate tax morality. The overall tax buoyancy ratio dipped to 1.01 in the 2016–17 financial year, but the Treasury anticipates a recovery to 1.31 in 2018–19 before a decline to 1.1 in 2020–21 (still above the long-term average of 1.08). A further breakdown of the Treasury’s tax buoyancy projections suggest a sharp pick-up in the company tax and VAT buoyancy rates in the medium term.

By Sanisha Packirisamy and Herman van Papendorp for Business Live

Update: President Jacob Zuma resigned with immediate effect on Wednesday evening, one hour before his deadline was up.  There is, however, still the matter of making official the appointment of Cyril Ramaphosa as the president of the republic.

Although the ANC has recalled President Jacob Zuma, it was still insisting on Tuesday that he had done nothing wrong.

Speaker after speaker at Monday night’s special national executive committee (NEC) meeting said Zuma should go for a range of reasons, central to which was the ANC’s electoral performance and the effect that his remaining head of state could have on the party.

On Tuesday, the net continued to tighten around Zuma.

The ANC said it was waiting for his response on Wednesday. Should he refuse to resign, the ANC said it would be forced to remove him in Parliament.

Zuma is expected to address the nation on Wednesday. The Presidency could, however, not be reached to confirm this.

As the ANC notified him formally of its decision to recall him, National Director of Public Prosecutions Shaun Abrahams gave the prosecution team dealing with Zuma’s corruption, fraud and racketeering charges until February 23 to provide their recommendations. This was after Zuma made fresh representations in January on why he should not be prosecuted. If Zuma declines the ANC offer to let him resign it will pave the way for his removal through a motion of no confidence.

In the past eight motions of no confidence against him, the ANC stuck to the party line that he should not be removed. It was only in the last motion that some of the party’s MPs voted differently in a secret ballot vote.

The party line this time will be that Zuma must go.

Business Day understands that the NEC has given the ANC caucus in the National Assembly the task of devising a strategy for his removal should he refuse to heed the recall.

The ANC chief whip has been instructed to brief the caucus, which is expected to meet on Wednesday morning while the ANC awaits a “response” from Zuma on the unanimous NEC decision to recall him. A cabinet meeting scheduled for Wednesday has been postponed.

While ANC secretary- general Ace Magashule told journalists that there was no decision on a motion of no confidence in Parliament, it is understood that the NEC agreed that should Zuma fail to resign Parliamentary processes would kick in.

Immediately after the ANC’s briefing, the rand weakened from R11.92 to the dollar to R11.98. Analysts said there was concern in the market that Zuma had not been given a deadline by which to resign. At 6.30pm on Tuesday, the rand firmed marginally against the dollar, to R11.96. Before Magashule’s announcement it had reached a best intraday level of R11.87.

According to sources who took part in the NEC meeting, which started at 2pm on Monday afternoon and dragged on into the early hours of Tuesday, the possibility of court action against the recall was also raised. This emerged amid reports that Transform SA — a Zuma-aligned lobby group — had launched a legal bid to challenge the outcome of the NEC meeting.

According to senior ANC leaders, Zuma was “very angry” and may not resign voluntarily.

Magashule confirmed that the NEC had rejected Zuma’s request for a further three months in office to “introduce” incoming president Cyril Ramaphosa to international bodies such as Brics and the Southern African Development Community. It is understood that even those who were seen to be staunch supporters of Zuma’s have indicated that it is time for him to go.

Zuma’s preferred candidate for the presidency, Nkosazana Dlamini-Zuma, while diplomatic about the matter, indicated at the NEC meeting that Zuma could not see his term out or deliver the state of the nation address.

When asked for the NEC’s reasons for recalling Zuma and whether it related to allegations of state capture, Magashule was emphatic, saying the president had not been found guilty of any wrongdoing.

Magashule said the reason for the recalled was that the party wanted Ramaphosa in the position of president and for him to deliver the state of the nation address. Magashule said that when a deployee of the ANC was recalled the party expected that person to comply.

For now, the ANC was giving Zuma “time and space”.

Magashule said Zuma was a “disciplined member” and he believed that the president would make the right decision, but again pleaded for time.

“The national executive committee firmly believes that this situation requires us to act with urgency in order to steer our country towards greater levels of unity, renewal and hope.

“We are determined to restore the integrity of the public institutions, create political stability and urgent economic recovery,” Magashule said.

By Natasha Marrian and Genevieve Quintal for Business Live

Zuma must go before SONA

The ANC’s national working committee (NWC) has instructed the party’s top 6 officials to tell President Jacob Zuma to step down, sources have told News24.

The party’s NWC held its first meeting on Monday, since being elected two weeks ago.

News24 understands that some members of the NWC want Zuma to resign before the State of the Nation Address, which will take place in two weeks’ time.

Officials are expected to meet with Zuma as early as this week to inform him of the party’s decision.

“The NWC decided that the officials must tell him to resign and they are working to ensure that it happens before SONA,” one NWC member told News24.

Another source said there was a call in the meeting for an emergency national executive committee (NEC) meeting if the officials failed to “confront” Zuma about his resignation.

Zuma’s job as head of state has been in the balance since Cyril Ramaphosa won the hotly contested election for ANC president in December, with some of his supporters calling for Zuma’s immediate recall.

Senior party members are worried about the impact his protracted stay will have on the ANC’s performance in the 2019 general elections.

Despite NEC members telling News24 that there was a decision to remove Zuma as head of state, the party’s secretary general denied this during a post-NEC media briefing.

Over the weekend, Ace Magashule, speaking at an ANC Youth League event in KwaZulu-Natal, said there was no decision for Zuma to resign, and “it is only factional leaders who want to be populist”.

His deputy Jessie Duarte told City Press that Zuma would stay in office until the end of his term in 2019. This was in sharp contrast to Ramaphosa’s comments to international media indicating that there were talks on Zuma’s departure.

By Tshidi Madia and Mahlatse Mahlase for News24

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