ANC manifesto 'to cost SA taxpayers R42bn'

Taxpayers will pay a heavy price for years to come to finance the grandiose multi-billion-rand plans unveiled by the ANC in its election manifesto a week ago.

Economists have estimated that R42-billion will be needed if some of the priorities in the ANC election manifesto are to be implemented - and this means extra tax.

According to the manifesto the child support grant will be extended to children up to 18, and 60 percent of all public schools will be free within five years.

Doret Els, an economist with the Efficient Group, who worked through the ANC's manifesto, believes these two promises could be funded in a number of ways.

"The state could take on an additional R1,75-billion debt, but this will ultimately be financed by the taxpayer, whether today or in time when the debt needs to be repaid."
Els estimated that 40 percent of schools are covered by the current R3,5-billion no-fee scheme. If this figure rose to 60 percent, an extra R2-billion would be needed.

Extending grants to children up to 18 years would cost an extra R3-billion, while the extension of unemployment assistance could cost the taxpayer about R17-billion.

"The revenue side of the budget is already showing some signs of strain (as is expected in the current economic downturn) and we anticipate that the 2008/09 budget will have a deficit of 0.7 percent of GDP," said Els.

"If we add the extra planned R42-billion to expenditure, the budget deficit increases to 2,1 percent to GDP."

Economist Mike Schussler, whose off-the-cuff calculations were not as high as Els's, agreed that the ANC's election promises, if implemented, could lead to a one percent or two percent increase for individual tax payers and companies.

"If the ANC promises hold, it means we are going to need an extra R25-billion in the next three years for social welfare alone. About 25 percent of this will go towards education and eventually that will become more than one percent of gross domestic product. Somewhere along the way we are going to have to raise taxes."

Currently education received about 5,3 percent of the GDP. Total spending on education in the past financial year had risen to R121-billion.

But Enoch Godongwana, ANC member of the policy committee, said many of the manifesto priorities would not bring an additional cost to what had already been included in the Medium Term Expenditure Framework.

"Look at the no-fee school plan - it's not something new, its already being implemented and therefore it is part and parcel of the government plan and it has been effected in the framework."

Godongwana added that the ANC did not share the view that there could be a deficit in the current financial year.

"If people say they are predicting a deficit, so what? We are not a kind of blind people who do not take the global context into account … We know that some of the global economic meltdown will slightly have impact on our plan."