Tax hikes and budget cuts could fund Zuma’s free education shocker: report

Buzz around president Jacob Zuma’s reported plan to find at least R40 billion within the South African budget to fund free education has put significant pressure on the rand.

According to reports by Times Live and the Mail & Guardian this week, insiders have said that the president is close to revealing a ‘shocking’ plan to fund free tertiary education in the country.

The reports point to Zuma disregarding findings within the Heher commission report into the feasibility of fee-free higher education – which a leaked version revealed states explicitly that free university education in the country is unaffordable – for quick political wins.

Citing senior officials, the Mail & Guardian reported that the president is looking at options to make massive cuts to existing budgets to find the money – including, but not limited to, cutting social grants payments; reducing the rollout of RDP houses; freezing government wages; and halving the military budget.

Other avenues to draw in more revenue also include hiking VAT, selling state assets or cutting down the number of departments.

These options have been suggested in the past, but in the context of filling the large R50 billion revenue gap that already exists in the budget. This time around, they are being discussed as a way to deliver free education.

The market has not reacted well to the speculation, with the rand weakening on Thursday and Friday on the news.

Analysts have criticised the plan for free education, saying that it is more a political and ideological tool than a feasible financial model – particularly at a time when South Africa is projecting a budget shortfall of over R207 billion in the next three years.

While many agree that free education is a worthy goal, prioritising free higher education over existing budget constrains is seen as highly irresponsible.


Read: Zuma planning shock free university announcement: report

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Tax hikes and budget cuts could fund Zuma’s free education shocker: report