The average South African is failing to grasp the opportunity to save money created by the government’s reduction of taxes, according to Finance Minister Trevor Manuel.
Speaking at a Dell Computers directors’ dinner in Sandton on Wednesday, Manuel said South Africa’s saving rate is low by international standards.
”Individuals, each person acting on their own, have not only spent the tax cuts, but they’ve even spent the next tax cut too.”
He said tax cuts over the past decade have increased disposable income in households faster than a rise in salary, and he emphasised that the loss of savings comes at a ”time of accelerating investment in the economy”.
This means that the economy relies more on foreign savings to fund investments than local savings.
He spoke about fraudulent tax submissions as a second example of how South Africa could land itself in financial difficulty.
”Some taxpayers, especially a few high-income earners, look for every opportunity to skimp a little here and a little there. They’re probably thinking, ‘Ah! Government has so much money, my little bit won’t matter.”’
Manuel said the combined effect of tax ”skimping” leads to a lack of resources to deliver proper services such as sufficient vehicles for police to patrol the streets and enough textbooks for schools.
”And so we complain about crime, which we are all legitimately entitled to do, but we continue to skimp just a little each year.”
Team work among corporate and private South Africa is needed to ensure that the country makes the kind of financial strides that could make it an international force.
”We have seen a number of cases in South Africa where board members have simply washed their hands of their fiduciary responsibility, and have sought short-term gain. I’m sure, in many cases, they did achieve some short-term gain. But, we as a country pay the price.”
Likewise, the actions of other countries often have negative consequences for the rest of the world.
”The fact that a single country, with 5% of the world’s population, consumes 25% of the world’s natural resources has severe consequences for global peace and stability.
”What we do, how we behave has consequences for those around us. In the past decade, we have seen the development of a literature around global public goods.
”Clean air, water, thriving oceans, pristine environments like the Antarctic are all assets that belong to us all, and to future generations. If we plunder these resources today, then there will be nothing for our children tomorrow,” Manuel said. — Sapa