The ANC alliance partners have often stated that they want a drop in the bank rate but the South African Reserve Bank is mandated by Government to curb inflation and keep it at a rate of between 3 and 6 percent. Being one of the few banks worldwide owned by private shareholders (who have no say in its operation and policies), reinforces the reality that the independence of the South African Reserve bank cannot be controlled.
Currently, 5 million employed individuals are paying taxes and are therefore the productive resources in the country. With these tax payers supporting 22 million unemployed people, their role in continuing to be productive is imperative, however the fiscus paying out more than it receives is not sustainable long-term.
In order to increase tax revenues it is important to point out that government must focus on economic growth. This will reassure markets and build confidence. It will increase the tax collected and reduce spending on unemployment benefits. One cannot just tax the employed people who are the ‘productive resources’ in the economy. The more they are taxed, the less motivated they will become. By taxing them less, it will result in them spending more and there will consequently be an increase in job creation. Companies will be able to employ more people.
Politicians should therefore focus on developing policies that increase the growth potential in the country, make it easier to hire and fire people so that businesses can take that chance to employ as they know they will not be burdened with that person if he/she does not perform.
The positive impact on the Government and ultimately the country will be:
Earning more tax through PAYE, VAT and company tax;
Government will have less people to support through grants;
People will feel less dependent on the state and feel more dignified and have more confidence in themselves;
Through spending more and increasing employment opportunities, the state will be less burdened.
But what do governments do, increase the public sector, increase the deficit. And who would pay for this, the next generation who had nothing to do with the crisis or the fact that government overspent.
Tax increases can kill any recovery, as it did in Japan in 1997, but governments like these tax incraeases as it is an easier fix on the problems they created.
To conclude, Government should interfere less and have an ‘out-the-box thinking’ approach. Productive people should be rewarded and once again, by lessening taxes, consumption will increase. By improving policies and focusing on growth it will result in vital employment opportunities taking the pressure off government and growing the economy.
Currently, 5 million employed individuals are paying taxes and are therefore the productive resources in the country. With these tax payers supporting 22 million unemployed people, their role in continuing to be productive is imperative, however the fiscus paying out more than it receives is not sustainable long-term.
In order to increase tax revenues it is important to point out that government must focus on economic growth. This will reassure markets and build confidence. It will increase the tax collected and reduce spending on unemployment benefits. One cannot just tax the employed people who are the ‘productive resources’ in the economy. The more they are taxed, the less motivated they will become. By taxing them less, it will result in them spending more and there will consequently be an increase in job creation. Companies will be able to employ more people.
Politicians should therefore focus on developing policies that increase the growth potential in the country, make it easier to hire and fire people so that businesses can take that chance to employ as they know they will not be burdened with that person if he/she does not perform.
The positive impact on the Government and ultimately the country will be:
Earning more tax through PAYE, VAT and company tax;
Government will have less people to support through grants;
People will feel less dependent on the state and feel more dignified and have more confidence in themselves;
Through spending more and increasing employment opportunities, the state will be less burdened.
But what do governments do, increase the public sector, increase the deficit. And who would pay for this, the next generation who had nothing to do with the crisis or the fact that government overspent.
Tax increases can kill any recovery, as it did in Japan in 1997, but governments like these tax incraeases as it is an easier fix on the problems they created.
To conclude, Government should interfere less and have an ‘out-the-box thinking’ approach. Productive people should be rewarded and once again, by lessening taxes, consumption will increase. By improving policies and focusing on growth it will result in vital employment opportunities taking the pressure off government and growing the economy.
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