Instead of announcing tax hikes in his budget speech on Wednesday, finance minister Pravin Gordhan should seek to raise revenue through asset sales, including the sale of “non-strategic liquid assets” such as Telkom, the Democratic Alliance has said.
In addition, the minister should announce the sale of “non-strategic immovable assets”, such as land and buildings, said DA MP and shadow finance minister David Maynier.
Government holds a direct 39,8% stake in the JSE-listed Telkom. At a share price of R53,30/share — the level it was trading at on Monday morning — that stake is worth about R11,2bn.
Telkom was partially privatised under the Nelson Mandela administration, and was listed on the JSE when Thabo Mbeki was president.
However, since floating some of the company’s shares, government has doggedly held on to its remaining stake in the business, insisting that it is a strategic asset.
According to Maynier, Gordhan has five big challenges going into the budget. They are: dealing with high levels of unemployment; avoiding a sovereign ratings downgrade; providing relief to poor households; dealing with the student fees crisis; and providing drought relief.
However, Maynier believes Gordhan does not have much room to achieve what’s necessary.
“The view that the minister has a ‘free hand’ to do what he likes seems exaggerated, especially given the back-pedalling on retirement reform, relating to the Taxation Laws Amendment Act, following political pressure from Cosatu,” he said.
“To get the economics right, the minister will have to get the politics right. The minister’s capacity to do things differently is limited by the political space available inside the ANC/SACP/Cosatu alliance.
“And the temperature inside the ruling party alliance is already red-hot following the battle over retirement reform. All this will limit the minister’s ability to effectively respond to the economic crisis and the risk of a ratings downgrade in South Africa.” — (c) 2016 NewsCentral Media
