South Africans will soon learn how much more of their disposable incomes and wealth will be extracted to sustain the credit rating. They will be told, correctly, why limiting the borrowing requirements of the government (the fiscal deficit) is essential to the purpose of holding down interest rates and the cost to taxpayers of servicing the debt (old and new) incurred on their behalf. What will not receive much attention from the finance minister is a recognition of the influence of taxes on the ability of economically active South Africans to pay these taxes. Evidence of policy failure, in the form of persistently dismal growth in South African incomes, is there for all to recognise. The rating agencies have identified the country’s lack of economic growth, and so of its tax base, as the long-term threat to the solvency of South African government debt. It is not good economic policy to tax some goods and services at a much higher rate than others. Nor does it help to subsidise mor...

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