Eighteen months ago I published a book, On The Brink, in which I warned that unless the Jacob Zuma administration was replaced by one that charted a more pragmatic course, SA would go over the fiscal cliff just as it had already gone over the subinvestment-grade cliff — in a state of ignorance and denial. There are two flaws in the reasoning of those who believe SA will avoid this fate, I wrote. First, they assume there is substantial room to raise taxes without hurting growth and competitiveness. And second, there is an assumption that the government will make tough, fiscally responsible choices when the crunch time comes. Well, that time has arrived. The Treasury is only too aware of the first constraint, which is why it avoided hiking VAT, personal or company income tax in last week’s budget. But the jury is still out on my second point: whether the Cyril Ramaphosa administration is willing to cut jobs at Eskom, cull radio and TV stations at the SABC, and sell equity stakes in st...

BL Premium

This article is reserved for our subscribers.

A subscription helps you enjoy the best of our business content every day along with benefits such as exclusive Financial Times articles, Morningstar financial data, and digital access to the Sunday Times and Times Select.

Already subscribed? Simply sign in below.



Questions or problems? Email helpdesk@businesslive.co.za or call 0860 52 52 00.