South African Taxpayers Bear the Brunt as Government Expenditure Skyrockets

Over the last decade, the South African government has taken on an aggressive spending policy, with a sharp increase in state expenditure and debt. This trend has placed a considerable strain on South African taxpayers, who are already grappling with a tough economic climate. Since 1994, the national unemployment rate has alarmingly ascended from 20% to 34% in 2024, with the government now disbursing grants to 28 million people, a staggering escalation from the 2.5 million individuals three decades prior.

Beyond these figures lays a deeper issue of unchecked government spending and an expanding, inefficient public sector workforce. With salaries rising above inflation and departmental budgets inflating consistently, the fiscal gap has broadened. This, coupled with rampant corruption and systemic mismanagement, has led the state's expenditure to swell from R292 billion in 2003 to R2.1 trillion in 2023—a 634% rise. In response, tax revenue has increased substantially, yet it continues to lag behind the government's lavish spending trajectory.

The deficit, unable to be bridged by tax revenue alone, necessitated heavier reliance on debt. Gross government debt has multiplied, from R427 billion in 2003 to a worrisome R4.8 trillion in 2023. The sovereign credit rating downgrade in 2017 to junk status further compounded the issue by propelling interest rates upward, markedly increasing debt servicing costs for the government. In the 2024/25 financial year, South Africa's daily debt servicing bill exceeded R1 billion—an unprecedented figure that has become the nation’s third-largest budgetary expenditure.

Reflecting on words from former UK Prime Minister Margaret Thatcher from four decades prior, as well as esteemed economist Milton Friedman, it is clear that government spending, ultimately, is a burden borne by the taxpayer through taxes, inflation, or borrowing. The increased government expenditure and consequent higher taxes—ranging from personal income tax to VAT and novel taxes on plastic bags and sugar-sweetened beverages—have inevitably siphoned more from South African workers and businesses.

A closer examination by Daily Investor emphasizes the gravity of the situation. While all South Africans contribute in some form, given the nature of VAT, the label of taxpayers is somewhat misleading when considering individuals wholly reliant on state grants. Drawing from the National Treasury's data, the number of individual taxpayers has grown from 11 million to 15 million between 2013 and 2023. Correspondingly, the per-taxpayer burden combining government expenditure and debt has more than doubled from R218,000 to R456,000.

The escalation in government spending highlights the exigency for fiscal restraint and improved efficiency to alleviate the pressure on the South African taxpayer and restore balance to the nation’s financial management.