How close is SA to defaulting if tax revenue is short again?

Finance Minister Nhlanhla Nene. Photo: Leon Lestrade/African News (ANA)

Finance Minister Nhlanhla Nene. Photo: Leon Lestrade/African News (ANA)

Published Jul 5, 2018

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The minister of Finance officially opened this year’s tax season. While he is right to applaud the SA Revenue Service for releasing its charter, when are we going to hear of government releasing its critical expenditure charter?

Everyone knows that government is too big and too expensive and in the process consuming scarce resources very extensively to the detriment of economic growth and service delivery.

Columnist Peter Bruce wrote last week: “It’s grim. The government borrows up to R20 billion a month to pay for schools, hospitals, welfare and, since former president Jacob Zuma doubled the public service, salaries as well. It is a formidable task and the bond sell-off means the National Treasury has to offer increasingly higher interest rates to attract buyers. Earlier this year it calculated our interest payments alone at R214bn a year by 2020-21. That is more than R850million every working day.”

What will happen to the salaries of officials, educators, doctors, nurses and police personnel, among others, if the capacity to borrow further evaporates? How close is South Africa to defaulting if the tax revenue comes short again?

A more pertinent question to ask is where exactly is South Africa in respect of the debt trap? Have we fallen into it or are we very close to falling into it?

Taxpayers are being squeezed from every side. Disposable income is declining and businesses are feeling the impact of that. Prospects of gross domestic product growth remain dismal. Can the government, and President Cyril Ramaphosa in particular, continue to avoid taking the buffalo by the horn? He knows just too well that the government is oversized and therefore that it is bleeding South Africa.

The political elite is putting obstacles in his path. Is he going to look at their fat interests or the interests of the nation? Having to pay interest of three-quarter-billion rand per day is unthinkable and pretty lousy politics to boot.

Ramaphosa and the ANC government must act very rapidly to save the day even at this very late hour. Tomorrow we will all be gnashing our teeth and asking why the government didn’t act when it should have?

It’s a grim situation as Bruce declared and I agree with him wholeheartedly. While the minister is waiting for the tax revenue to pour in, the

winter of discontent is deepening.

Farouk Cassim (Cope)

Milnerton

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