The
Minister of Finance has delivered his Budget for the forthcoming year, a speech
full of words and signifying nothing.
The Budget
proposals are remarkable for a number of factors. It is rearranging the deck chairs on the
Titanic on a national scale. It fails to
recognise the many impediments to economic growth that the ANC Government
policies and practices have built into the economy, the huge number of hidden
costs and difficulties confronting the entrepreneur seeking to start and to
operate the new businesses that should be the lifeblood of the economy. It starts with the basis of what was done
last year, and increases from there, without looking at the real value that
each item of expenditure generates, or fails to, or at the real cost of the
costs and taxes raised, but simply assumes that they are good and goes on from
there. There is virtually no
understanding of the real blocks that are holding back the economy, and assumes
that a 1% or 5% increase will not make any real difference.
Let us
start with the real question: Do we need
taxes?
It is an
almost universal view that taxes are, at best, unpleasant or, at worst,
evil. A tax is money taken from the
economy, money that, in the hands of the taxpayers, would probably be applied
to the most effective purpose, and then given to people with little understanding
of the value or the alternative uses of it who either spends those taxes on
items of expenditure that the taxpayer would not himself, or invests them in
elements of infrastructure that are needed by the country or a large part of
it, rather than by the individual taxpayer.
The taxpayers in Switzerland are willing, if not exactly happy, to pay
their taxes because they know that the funds will be applied to purposes that
they support and, in most cases, to purposes which will benefit them. They believe that the money will be correctly
used. That is certainly not the case in
South Africa. Most taxpayers in South
Africa, if they were given a line item choice of what expenditure to support
and which to reject, would accept no more than 20% of the expenditure that the
Government so willingly throws away in the name of the taxpayers. Those paying the taxes (a class of people
substantially different from those receiving the benefits) would reject the
expenditure of 47% of the Budget on Civil Servants. An amount of 20% would be too much for the
value these people add to the economy!
They would reject the wisdom of paying social grants to 13 000 000
people (and growing!) with a taxpayer base of 3 500 000! They would be unwilling to fund the possible
R200 000 000 on Nkandla, the R54 000 000 over-expenditure
on travel by the Presidency, the R30 000 000 on a fence to the
Ministerial Compound in Pretoria (where an adequate fence already existed), the
cost of thirty-four Ministries, where the United States has only twelve. They would not support the high cost of the
Defence Force, a body that appears to exist solely for the dual purposes of
maintaining the rule of African dictatorships and providing a backstop for the
overthrow of the ANC as the ruling Party (what other use has the $5,4 billion expended
on munitions in the 1990s accomplished?)
That amount could have solved the education crisis, if there had been
political will to do so, with change left over to pay the bribes.) They would want a clear statement of what the
South African Police Services intends to accomplish in the field of fighting
crime, also within its own ranks, how the National Prosecuting Authority
intends bringing the 748 criminal charges levelled against the President to a
conclusion that is consistent with an even-handed justice for all. They would want to impose a limit of a C
Class car on any Civil Servant, with the Range Rovers being sold on public
auction for the benefit of State coffers, and they would want the personal
bodyguard of the beloved President reduced to three persons, without a need for
one of them to trot alongside the Presidential limo a la Barrack Obama.
The answer
to the question is that we do need taxes, but any dispassionate review would
find that the funds raised by the present VAT (at the rate of 14% - those old
enough to remember will recall that, when he raised the rate from 3% to 4%, the
then Minister of Finance made the commitment that there would never need to be
a further increase!) would be more than adequate to fund the necessary
requirements of the citizenry. There
would not be a need to increase the fuel levy by 30 cents per litre to a level
of nearly 50% of the cost of fuel, nor the levy to fund the Road Accident Fund
at an increase of 50 cents per levy, there would be no need to pay e-tolls for
the use of roads that were largely built using taxpayers’ money, with more than
a third of the amount collected going to some anonymous company is Austria, the
contract details with which and the ownership of which have never been
divulged.
The removal
of the heavy overburden of officialdom, more than half of which is simply a
disguised form of unemployment benefit to reduce the official unemployment statistics
and to secure the votes of those persons for the ANC, would have the immediate
effect of enabling start-up businesses to get going, without the cost and time
delay (currently eight months!), and would enable those businesses to start
employing people. The largest constraint
on the development of Black-owned businesses is the Government!
Heinrich
Himmler stated that, if you tell a lie often enough, it becomes the truth. That could certainly be applied to the need
for tax.
The writer
is a Management Consultant, with vast experience in the streamlining of
business processes, and with considerable in-depth knowledge of the operations
of Government Departments. She can say
with absolute assurance that it would be possible, within a year, to cut the
salary costs of Government by at least 20%, without doing anything clever. Those jobs cut would not result in
unemployment. The application of the
salaries paid to those people for one year could easily generate over five hundred
thousand sustainable jobs, something that the Government has shown itself
totally unable to achieve in its twenty years of misgovernment, with the
application of the Multiplier Effect generating at least another four million
sustainable jobs within the next three years.
Why has she not done that? The
answer is simple. An approach to one of
the Provinces resulted in a request for a bribe of R1 800 000,
payable in cash in advance in order to obtain Provincial Government approval,
with the assurance from the bagman that ‘the payment includes the Premier and
the MEC for Economic Development’! That request
was refused, and the next two letters to other Provinces are still awaiting a
response, after some years, despite reminders and requests for response!
If South Africans
are really concerned for the future of their country, it is time for them to
demand a clear statement, by line item, of how their taxes are to be spent, and
the choice to refuse to support any item of tax they disapprove. It is time for them to realise just how much
money they each pay to the Government, and how little benefit they receive for
it. It should no longer be sufficient
for the President to say blithely in regard to Eskom, a State body that has
been in a condition of crisis, a condition that would have brought a listed
company to the Insolvency Court, since 2008 (seven years for those who can’t
calculate!), that “we have a plan”. The
truth is that the Government does not have a plan, or, if there is the vestige
of a plan, it does not have any capability or desire to implement it before
Eskom, and the country, goes into a terminal collapse.
If South
Africans continue to shirk the responsibility of realising that the Government
has achieved for South Africa a financial and fiscal state approaching that of
Greece, and of then taking action to correct what they have allowed to happen,
they must realise that others will take that action for them, in a way that is
sure to be less pleasant. The first
signs are already there, in the withdrawal of good companies from South Africa,
the cancellation of early plans by international investors to invest in new
industries, and the continuing lowering by the ratings agencies of the credit
standing of the Government-issued and –backed securities, with the concomitant lowering
of the securities of South African financial corporations. There is not a single negotiating body to
tell us of this, as happened in the case of Greece, but the effect will be the
same. Is that what South Africans want?
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