The National Treasury had to present a credible plan on how government debt will be reduced over time to improve South Africa’s credit rating and facilitate easier access to finance for the private sector, South African Chamber of Commerce and Industry (Sacci) CEO Neren Rau said on Tuesday.

In a media release ahead of Finance Minister Pravin Gordhan’s Medium-Term Budget Policy Statement (MTBPS) on Wednesday, Rau said South Africa’s economic growth was highly dependent on attracting and sustaining the interest of foreign investors and, therefore, this could be seen as the most important immediate policy priority.

“Government also needs to borrow funds as cheaply as possible in the short term to expand our infrastructure network and accommodate the growing public sector wage,” he said, adding that Gordhan was expected to address this issue in his MTBPS.

Meanwhile, Rau stated that Gordhan should present a more feasible alternative to a carbon tax and delay the implementation of this tax in 2015 to provide sufficient time for stakeholders to fully deliberate on the issue.

“Sacci has been at the forefront of advocating against the proposed carbon tax that could lead to job losses and further entrench South Africa’s deindustrialisation trend, and other concerns over the impact on investor confidence and the sustainability of various sectors ranging from heavy industry to agriculture have also emerged,” he said.

Further, the public sector had, over the course of the past five years, displaced the trade sector to become the single biggest employer at 23% of total employees, with government employees increasing by around 19%, compared with a 1% decrease in total employment.

“The direct impact of this trend is that one in four South African employees now works for government. Merely paying public servants has now become a major influence on fiscal policy, as opposed to building schools, expanding infrastructure and providing basic services,” Rau said.

He stated that this trend was unsustainable and that the South African business community called on Gordhan to commit to drastically reversing, rather than merely delaying, the growth of the wage bill.

Meanwhile, he said that, while Sacci supported the employment tax incentive in principle, it believed that the proposal in its present form severely limited the application of the incentive to special economic zones and specific industries, which effectively curtailed the beneficial impact of the incentive.

“Despite the pressure from organised labour, the National Treasury must rollout the tax incentive in a meaningful way. Sacci expects Minister Gordhan to address the issue squarely in his address and provide certainty on the implementation and funding towards the incentive,” Rau said.

Lastly, Rau said Sacci had participated in exploratory discussions with the Treasury’s Tax Review Committee on ways to improve tax administration for small and medium-sized enterprises and was excited about the potential for real progress towards a more business-friendly tax regime.

“Sacci hopes that the concerns of the South African business community relating to fiscal discipline, an eroding tax base and the need for concrete commitments to programmes supportive of economic recovery, will receive positive attention in the MTBPS,” he stated.