SA’s real crisis: Taxes, policy failure and corruption, not cost of living – Sindile Vabaza
Key topics:
Overtaxation erodes savings and drives households into debt
Policy burdens stifle small business growth and job creation
Corruption and state-led focus waste resources and block progress
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In his 1985 comic book, How an Economy Grows and Why It Doesn’t, American tax resistance advocate Irwin Schiff tells the story of a primitive society where people spend all their time fishing with their bare hands to catch a fish a day.
All their time is used up in this way, as any time spent doing anything else would likely result in their not being able to catch a fish to eat. Their total daily production is thus catching and preparing the fish for consumption, which essentially means they consume all they produce.
One day, one person decides to consume only half of their fish for the day, and save the rest for the next day. They want to also set aside time the next day to construct a net to catch more fish. They are thus able, in the future, to catch more fish, which leaves them better off than they were.
They now have various options with regard to their excess fish. They can keep some of the fish and do other things like grow crops, or they can “lend” fish to other people for a return so that other people can do other activities, or they can even take time off to develop some cultural activity that will enrich the whole community.
All this provides fertile ground for an economically and culturally evolving community, with diverse goods and services, higher levels of production and innovation and growing living standards enabled by the limiting of consumption in the present. The community engages in saving, which enables investment in productive and innovative pursuits. These then lead to even more goods and services, which improve the ability of individuals to meet not just their own needs but the needs of others in the community.
So how does this relate to the quagmire that is South Africa’s political economy?
I would argue that South Africa does not have a cost-of-living crisis, but a tax (savings) policy and competence/corruption problem. No national dialogue or clever schemes are going to provide relief to our populace or lead to the economic growth the country so desperately needs.
Tax (savings)
South Africans are overtaxed. That is part of the reason why so many people have so little margin to save or have to resort to debt to make ends meet.
