Government can always rely on taxing citizens: Godongwana
In a recent interview, Finance Minister Enoch Godongwana was asked about his concerns about the country’s financial stability.
Finance Minister Enoch Godongwana stated that the government won’t run out of money because it can always rely on taxing its citizens.
SOUTH AFRICA SURVIVES ON TAXPAYERS: MINISTER ENOCH GODONGWANA
In an interview with SABC News Godongwana was asked whether South Africa could run out of money soon.
This apprehension arose following the National Treasury’s significant measures proposed late last year to curb spending, amidst concerns that the government had exhausted its funds and was on the brink of a debt crisis.
According to Bussinesstech, these measures encompassed a freeze on hiring for new public service roles, a cessation of procurement contracts for all infrastructure endeavours, and a restriction on salary increases for public servants.
In response to these concerns Godongwana reassured the public that South Africa’s financial stability is upheld by taxpayers, emphasizing that the government’s funding source remains intact through taxation.
Godongwana stressed the government’s commitment to prudent fiscal management. In an interview with SABC News, he affirmed that while challenges exist, the government is actively addressing them to ensure sustainable public finances.
“No government runs out of money when they can tax people any day,” he said. “If we were running out of money, we would have increased taxes.”
SOUTH AFRICA’S TAX BASE: NAVIGATING FRAGILITY AND SUSTAINABILITY
Recent data from the National Treasury underscores the notable concentration of tax revenue in South Africa, particularly evident in the significant contribution of personal income tax (PIT), projected to reach approximately R739 billion in the current financial year.
As per the National Treasury’s data on individuals and taxable income for the 2024/25 financial year, a mere 12% of the population, equating to 7.4 million individuals, are classified as personal income taxpayers.
This staggering statistic reveals that less than one million individuals, constituting just 1.4% of the population, bear the weight of financing crucial sectors such as education, healthcare, security, and social grants.
Moreover, the reliance on corporate income tax exacerbates the strain, with projections indicating it will contribute R303 billion, equivalent to 16.2% of total tax revenue for the year.