Grow the economy by 8 %

The Democratic Alliance’s Alternative Budget 2012 sets out how the national budget could be structured to  accelerate economic growth in South Africa from 3 % to 8 % over the medium term.

Tm Harris, the shaow Minister of Finance of the DA

If our economy were to grow by 8 % a year it would double in size in ten years. In 2022, we would have around R2 trillion to spend on service delivery a year – double what we have available to spend today.

This Alternative Budget shows how we could, through government’s fiscal policy, ensure that ordinary job seekers, workers and small businesses get a fair stake in our economy by:

•Implementing a youth wage subsidy to break down structural problems in the labour market and help create jobs for 3.3 million unemployed young South Africans;

•Helping small businesses create jobs by extending tax breaks to assist with cash flows and provide additional support services.

•Helping promote share ownership for employees through the tax system, and extending similar benefits to unlisted companies.

The budget  tables plans to ramp up infrastructure spending – even beyond levels committed to by the President in the State of the Nation Address – to tackle the R 1.5 trillion backlog in infrastructure identified by the Department of Public Enterprises.

The theoretical example we use shows how it would be possible for government to do this solely by injecting private capital into state assets – avoiding an increase in the budget deficit or the public-sector borrowing requirement.

Our budget includes almost R 9 billion of tax cuts, primarily to drive investment and share ownership. It also identifies R 31 billion in expenditure reduction, and proposes R 50 billion of new expenditure, mainly in the pursuit of higher growth and broader ownership. Importantly, it achieves these objectives while projecting a budget deficit slightly smaller than National Treasury’s forecast of 5.2 % of GDP for 2012.

View the DA’s proposed budget here

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