While finance minister Enoch Godongwana has had a history of bumping heads with colleagues in cabinet and officials at institutions that report to the National Treasury, the day he tabled his medium-term budget policy statement he was in a surprisingly jovial mood.
On Wednesday, the minister played nice with officials, from the tax man to the central banker. Still, he did not hold back on his observations when it came to colleagues he disagreed with.
Godongwana slammed a remark by health minister Aaron Motsoaledi that the national health insurance (NHI) could potentially be funded by scrapping medical tax credits.
That was just one of the many colourful takeaways from the minister’s MTBPS in parliament on Wednesday.
To Motsoaledi’s remark, Godongwana said the minister of health does not determine or adjust tax or related policy.
“On the notion of a statement about scrapping medical scheme tax credits, I have made no such statement. Taking away medical credits would be an attack on the middle class. I have not made such a statement. For me to say that, I would have to say what we are putting in its place.”
Godongwana’s remarks come after Motsoaledi said the only way to fix the public healthcare system is to change the funding model through an NHI that could be funded by interventions, including the reallocation of medical scheme tax credits.
During a parliamentary plenary late last month, the health minister clashed with MPs on the proposals, asking why well-off consumers should be given tax credits for joining a medical aid scheme when ordinary South Africans could not.
The biggest development from Wednesday’s MTBPS was Godongwana’s announcement that the country’s official inflation target would be adjusted downwards to 3% with a 1% tolerance band upwards and downwards.
This is a considerable change of heart from August, when Godongwana released a statement stressing that he had no intention of revising the inflation target. After South African Reserve Bank governor Lesetja Kganyago said the monetary policy committee (MPC) would anchor its inflation outlook to 3%, Godongwana’s statement said the MPC could not set monetary policy on its own.
Is VAT off the table? Yebo! VAT is off the table, Maqabane [comrades]. The [Sars] commissioner [Edward Kieswetter] says that VAT is under the table. But whether you view it as on the floor or not, VAT is off the table.
— Enoch Godongwana, minister of finance
In his moment of vindication by Godongwana’s latest analysis that the tighter and lower inflation target would yield long-term benefits for South Africans, Kganyago was coy about his victory.
“It’s not my target; it’s the country’s target. The minister and I have agreed on a target of 3% in line with our peers. It’s something that the Treasury and the RB have studied for an extensive period.
“When we look at our current inflation target band, it was wide and too high. This move was about taking it closer to where our peers are … there is no vindication. There is only one winner here. It’s the South Africans who are going to enjoy a low-inflation economy.”
In an interesting twist, Godongwana allowed deputy minister of finance Ashor Sarupen to open the the morning briefing ahead of the MTBPS speech. It is usually the minister himself who addresses reporters first.
This is ostensibly viewed as a bid by the minister to convey the message that the MTBPS enjoys broad support from all parties in the government of national unity, given that Sarupen is a DA MP.
It also remains open to speculation whether Godongwana’s choice of outfit ― a two-piece suit in a light shade of olive green ― was an indication of how optimistic the minister was about the MTBPS and how it would be received.
Godongwana was asked by a reporter if he was no longer considering a value-added tax hike, which forced three attempts at the tabling and approval of the budget earlier this year.
The minister simply responded light-heartedly: “Is VAT off the table? Yebo! VAT is off the table, Maqabane [comrades]. The [Sars] commissioner [Edward Kieswetter] says that VAT is under the table. But whether you view it as on the floor or not, VAT is off the table.”
Kieswetter was another official that Godongwana was at loggerheads with earlier this year over the proposal to raise VAT, which the Sars commissioner did not consider to be necessary. The minister was heard criticising Kieswetter while unknowingly speaking into a hot mic.
At the pre-MTBPS briefing, Kieswetter reminded reporters that the extension of his contract as Sars commissioner runs to next April, which would make this the final MTBPS that he would be a part of.
“My contract ends in April, unless he fires me before then…but I have agreed that if we have identified a successor, then we can start a transition...[The timeline on] that depends on the transition.”
Godongwana said South Africa’s economic growth prospects were shaped by domestic factors as well as global developments, but that the country was poised to enter better growth levels than it has had in recent years.
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