Next month my new book, Future Tense — Reflections on my Troubled Land, will hit the bookshelves here.
There was one potential problem in crafting this effort, beyond the agonies of the creative process in general.
Writing the book during the first coronavirus lockdown in 2020, beyond the intimations of mortality it induced in us all, posed a dilemma. This is because of the fast-changing nature of the ever-mutating virus and the responses to it. The facts, the science and the policy responses, or lack of them, alter very quickly.
Unlike a newspaper column which offers a moving snapshot of the here and now, a book on current affairs and the country’s future prospects must attempt to stand the test of time, even if these times, to quote Bob Dylan, “they are a changin”.
Beyond the rapid nature of swirling events, there is the second issue: with a book there is an end or bottom line, and you need to stop at a definite point, the print deadline. New crises and unimagined problems are just that: issues for future contemplation not addressed between current covers.
However, one central conclusion I reached early on in the process and which inoculated, even if no-one here has yet been given a jab, against future shocks, was obvious. The personalities, policies and politics of SA predated, sometimes by decades, the arrival of the virus on these shores a year ago and all the events which have followed. So the facts and the upheavals might change, but you can, with some accuracy, forecast the likely responses, preparedness and choices even if the contours of a specific problem are barely glimpsed.
One constant which government here has grappled with, with ever more dismal results, is how to fund itself and the ever-increasing demands on it for relief by shaking the magic money tree.
When I commenced the first chapter early last year, the Treasury recorded in the February 2020 budget, which covered the previous financial year — to keep the ship of state afloat, and to pay the army of public servants and welfare recipients mainly — the country was obliged to borrow R335.3bn every year, about R1bn every day.
By the time I came to the later chapters in September 2020, we were borrowing a projected R776.9bn annually, more than R2bn a day — a doubling in one year. By 2021, it is conservatively estimated we will be paying — on the interest for all this borrowing — R301bn this year, an increase from R240bn in 2020. And so the numbers grow and the debt trap, in lieu of real and hard reforms, looms.
On this bleak canvas finance minister, Tito Mboweni will sketch his budget when he rises and tables it in parliament next Wednesday.
He is a certified reformer, but he stands practically alone in government in, first, recognising the problem and, second, articulating the need to do something real to arrest it. Or else, as he constantly reminds us, we face an Argentinian future with sovereign debt defaults, hyperinflation, currency collapse, and the arrival of the fully blown failed state.
One group generally regarded as the reliable milch cow to be the funder or first, second and every resort are the personal taxpayers of SA, the small band who are the biggest contributors, as a percentage of the tax take, to state revenue receipts.
But just how tiny this group has become is worth repeating: a local report suggested last year that there were only 1,000 taxpayers in the super-rich category, with taxable earnings in excess of R5m annually, a drop from 7,500 in 2015.
Last week, Rand Merchant Bank CEO James Formby told Business Day there was a flood of skilled, high net worth people emigrating (or intending to leave when vaccinated, presumably). And in the same period the super-rich numbers declined, the report containing the Formby comment showed another alarming trend: a 55% reduction in the number of middle-class taxpayers from 6.1 million to 2.7 million individuals between 2017 and 2020, a fall of more than 50%.
And of course, there are National Treasury incentives which are worth consideration and retention, from tax-free monthly savings to modest private medical aid payments relief.
A scheme I became aware of recently in my professional work (disclosure: I consult in this sector) is the Section 12J initiative of the Income Tax Act. First introduced in 2009 and fully implemented in 2015, the industry has been enabled to invest R9bn in local projects, including in rural areas, in exchange for capped tax relief. In the industry’s estimation, this has generated about 10,500 new jobs. But the relief has a sunset clause which could expire later this year.
There are creative options to retain taxpayers, generate revenues and increase employment beyond following the formula of “tax-and-spend”, which as figures past, present and future suggest, is rapidly running out of road. Or ends in a cul de sac called state penury.
But it requires imagination, flair and a fierce will to navigate it. Let us see which road is taken next week.
Leon, a former leader of the opposition, now chairs Resolve Communications.
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