Sing a song of sixpence
Despite taking a larger and larger chunk of the proceeds of the hard work of ordinary South Africans, the Government is running out of money. Only higher levels of growth can save it, although current policy thinking indicates that such a realisation is yet to dawn.
This edition of Fast Facts reviews South Africa's tax base. It finds that government revenue as a proportion of gross domestic product (GDP) rose steadily in the latter apartheid years from 19.6% in 1976/77 to 23.3% in 1990/91. The figure then flattened out through the 1990s and into the early 2000s, sitting at 23% in 2004 for example. However, the past decade has seen a rapid increase and by 2015/16 it is anticipated that government revenue will account for 29.7% of GDP.
The implication is that the Government believes it can more effectively invest the profits of the hard work of ordinary people and bigger companies alike than the private sector can.
It is not only the employed and the economically active that carry the tax burden. In 2013/14 42.1% of government revenue came from ‘indirect taxes' including value added tax, fuel levies, and customs duties.
Yet what the Government is collecting is not nearly enough. Its budget deficits of the early 2010s are on a par with what the apartheid government faced after the 1976 uprising. While treasury forecasts suggest that the deficit will dip back to below 4% of GDP by 2015/16, we remain unconvinced and suspect that the GDP growth estimates to make that possible have been over- stated.