Kabelo Khumalo’s article refers (“Ageing taxpayers prop up SA’s shrinking tax base”, January 26).
An economic analysis of the contributions of subgroups by age can be extended to additional dimensions. An analysis by geographic area shows that interprovincial transfers are startling: an increased understanding of that would lead to a push for reduced redistribution from the contributing provinces and put pressure on the federal nature of South Africa.
There is material intraprovincial redistribution, even within cities and municipalities. Analysis by race group would also show that there are meaningful intergroup transfers — it is taxpayers that fund grant payments.
Khumalo briefly addressed the role of education as a gateway to employment and how poor the returns have been. Compared to other countries, our education budget is immense, yet we are almost always a laggard in studies of the competence of pupils.
In addition, the attentive reader can wind the clock forward. In a decade, many of those in the 55-65 age bracket will have retired, and many of those older than 65 will be deceased and no longer paying tax. The unskilled and unemployed 15-24 age group will have transitioned to the next age category, and the youth will have been replaced.
Many argue that intergroup transfers buy off those with revolutionary tendencies. An argument can be made that if we don’t change the underlying fundamentals urgently we are simply buying time and delaying a reckoning.
All we have to show for this is a growing debt-to-GDP ratio, a large interest bill that’s crowding out pro-poor expenditure alternatives and low rates of fixed capital investment (which translate into low rates of productivity). That points to low and falling rates of GDP per capita and limited poverty alleviation in the future.
Greg Becker
Via Business Day online
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