So, recently there has been a lot of talk surrounding the South African economy, especially with regards to Ramaphosa’s proposed stimulus package and jobs summit. This piece will highlight that the most effective way for the South African economy to recover from its current recession would probably be to vote for the DA in next year’s general election.
It has become a truism within South African politics that corruption is a major problem the country faces, but this fact deserves to be restated. Corruption seems to be endemic to the ANC, as the Zondo-commission into state capture highlights more day after day, while irregular spending continues to rise in state owned enterprises and municipalities.
What is the economic cost of this corruption? Through corruption, connected officials can line their own pockets at the expense of tax-payers, redirecting money that should go to economic stimulus and service delivery. The result is that the South African state is burdened under a massive tax deficit, which cannot be enlarged. This has forced Ramaphosa to merely reallocate funds from one budget to another in his stimulus package. Furthermore, this deficit has to be funded from tax-payer money, leading to an increase in taxes such as personal income tax and VAT, which lowers the amount of disposable income available to consumers. Finally, a massive state debt means that much of the tax money the state gains has to be paid as interest to overseas lenders, rather than being reinvested in the country and its people.
As mentioned, this means that the state has less of a leeway to invest money in programs such as education, health and infrastructure as money that should have been invested here is leaked away due to irregular spending or interest payments. To continue furnishing its debt, and paying its social grants while still lining the pockets of top politicians, taxes have to be increased yearly. This has led to the most recent VAT increase of 1% and a fuel price that is significantly higher than our neighbours’ fuel prices, due to massive levies placed on it.
When it comes to corruption, the DA is demonstrably more clean than the ANC. At the start of 2018, 80% of Western Cape municipalities, under DA control, registered clean audits. This means that the auditing process they followed was accurate and transparent, indicating that there was little to no corruption to hide and any corruption that did take place would be brought to light. This was a higher rate of clean audits than any other province enjoyed. Furthermore, the four provinces in which irregular expenditure had increased the most were all ANC-led provinces, namely Kwa-Zulu Natal, Free State, Limpopo and the Eastern Cape. As such, the DA not only delivers more transparent audits for its municipalities, it also suffers from less irregular expenditure.
What this practically means is that, with a DA government, South African citizens could expect both more transparent governance and less irregular expenditure. Less irregular expenditure would help the state balance its budget deficit, lead to more money being invested in programs such as health, education and infrastructure, and would not necessitate some form of tax increases every year.
