Chairperson, hon Minister, congratulations on delivering your 10th Budget Vote; you correctly painted a rosy picture of the economy with the economic growth forecast revised to 4,2% of GDP from the forecast of 3,8%. The revenue authorities are also to be commended for collecting R41 billion more than last year's projected target.
The balance, hon Minister, that must be struck, is to use the fiscal space created by the revenue overruns and savings on debt service costs to give something back to the economy, and in so doing, to address poverty and unemployment.
The ACDP trusts that personal tax relief granted will result in higher levels of domestic savings. The national savings ratio has steadily declined to 13,5% for 2005, bringing the savings ratio to a level previously seen in 1949. We also trust that the welcome reduction in the tax on retirement funds, halved from 18% to 9%, will result in greater domestic savings.
The ACDP is also on record as supporting a reduction in corporate tax rates. However, the removal of the RSC levy will result in substantial savings for business, bringing effective tax relief of about R7 billion a year. According to the Business Law Review of March 2006, the fact that the RSC levy is not replaced can, for all practical purposes, be equated to a 2% cut in the corporate tax rate.
The ACDP encourages small businesses that are not tax compliant to make use of the tax amnesty granted by SARS. Clearly, the larger the net, the lower the rate of tax will be for all of us. With the core priority of the budget to strengthen education, public health services and social welfare services, we welcome the additional R30,9 billion to the provincial equitable share over the next three years.
We also welcome the increases in the social welfare grants, which, though modest, will go some way to alleviate the plight of the poorest of the poor.
Serious cause of concern is that we are running our largest current account deficit in history, currently at R73 billion or 4,7% of GDP. Can we continually rely on a sufficient surplus on the financial account to cover the deficits on the current account? A further constraint to economic growth is clearly the capacity of Eskom to deliver power. Certain issues have been raised in the Financial Mail, which I would like to quote from the 3 March 2006 edition. Whilst Eskom itself has certain plans in place, the Financial Mail quote says that "whilst we can blame Eskom for the blackouts, the biggest folly is that of economic planners, government itself". Clearly this is an aspect that needs to be looked at.
Whilst there is a huge demand for social security as indicated by substantial increases in the budget, government must shift from welfare towards development - and this, hon Minister, you have stated already - in order to address poverty and unemployment in the long term. At the end of the day we will be judged on the degree to which the economic boom translates into more jobs to address the poverty experienced in our country. This is the ultimate challenge.
Thank you, hon Minister, and congratulations to the Treasury and Ministry for the exceptional job done with this Budget.