Budget week is upon us. Say a prayer for the man who has to cut spending while alleviating poverty ...
NOT to put too fine a point on it, but some of us have noticed that Trevor Manuel, Minister of Finance, has very little hair.
And what's left of his hairline will probably be torn out in the coming week as he rolls out the 1998/99 national budget.
This will be Manuel's second budget presentation. His first, last year, was widely praised. He cut government spending in real terms, increased funding for education, and further eased exchange controls.
Provinces — grown accustomed to untrammeled expenditure during the years of apartheid — have since felt the pinch, but the central government's commitment to financial discipline has paid real dividends in lowered inflation and stable exchange rates.
The cost of this financial discipline has been immense. Education and health have suffered. Some 116 000 jobs have been lost, and the government's determination to slash the bloated public service will exacerbate the new apartheid between those who have jobs and those who do not.
Jobs, jobs, jobs. President Mandela's clarion call at his State of the Nation address is not easily answered. The result of better paid jobs — as the mining industry has discovered — is fewer jobs.
This week, the world will be watching parliament as the government unveils a budget that will define our path into the next millennium.
Why the millennium? Past governments have tended to work with Andy Capp budgets - rushing to the pub to spend the wife's wages on payday with nary a thought for the bill collector who will be knocking at the door after the weekend.
This year's budget will attempt to define a three-year projection of government revenue and expenditure so as to allow for better planning. This medium-term expenditure framework (MTEF is the new buzzword) will help provinces get their houses in order.
For well-run businesses, this sort of forecasting is taken for granted. For the government, this is new territory.
Why should the world be watching? For the answer, look to the East. The typhoon that ripped through Asian markets was felt as a strong gust on the JSE, but we weathered the storm precisely because of the economic fundamentals the government espoused.
Cosatu, trade union giant and the government's erstwhile partner, would like to see those economic fundamentals revisited. Increases in corporate tax and decreases in personal tax and VAT are among the steps Cosatu would like implemented.
Cosatu is obliged to make such demands as they would directly benefit union members. But are these proposals in the nation's interest? Increases in corporate taxes are a sure-fire way to disincentivise job creation and foreign investment.
Capital, as business giant Tony O'Reilly reminded us recently, is fickle. Investment can flee this country as readily as it has done in Asia. The effect on our economy should there be a wavering in the government's resolve would be devastating.
The Democratic Party would like to see an increase in VAT and decreases in personal and company tax. This is sound. The country's parallel economy — the informal sector — contributes to the tax base only through VAT. They need to be drawn further into the tax net and increasing VAT is currently the only way of doing that. Exempting basic necessities from VAT would minimise the effect on the poor.
My personal advice to Manuel: revisit the billions upon billions in "blocked" rands that emigrants want to take out of the country. Why not allow them to do so, but tax the outflow substantially at, say, 50%? If they want the money badly enough, they'll pay.