WHILE the 36¢/l drop in the price of petrol that kicks in tomorrowwill bring some reliefto deeplyindebted consumers, much ofthat concession will becounteractedbythehigher VAT rate thatwill becomeeffectivein April.
Together with a range of other taxes and levies introduced by former finance minister Malusi Gigaba in his 2018 budget, consumers are in for rough ride. The decline in the diesel price of between 44 and 47 cents alitre will helptransportoperatorstoreducetheir haulagecharges,thusperhapsreducing the costsof someessential goods that are dependenton roadtransportation. Neil Roets, CEO of Debt Rescue, said while he welcomed the reduction in the price of fuel – which was largely the result of a buoyant currency and lower crude oil price- the reality was that the majority of South Africans were facing an uphill battle every day just to put food on the table.
“Weknowfrom ourownresearchthe impact that every price increase has onthe overwhelmingmajorityof South Africans wholive on the edgeand who battle on a day to day basis to make endsmeet.While we fully understand the need for the government to generate revenue to pay for the vast array of services rendered by the state, increasing tax likeVATthat affects the poorest of the poor disproportionately was perhaps not the best way to do it.”
Roets said despite promises by Pré dent Cyril Ramaphosato scaledown the size of the government, nothing has been said about the fact that some ministers have employed vastly more members of staff than they were entitled to, including close friends and members of their family.
“Nepotism is rife throughout the government and the public service.Rather than trying to squeeze more money out of consumers who are already at the end of their, much more needs to be done to rein in out-of-control spending of the government departments.
“Even after the announcement by the president that he was planning to put a lid on government spending,numerous government entities including Eskom had attempted to skip payments in the form of unauthorised expenditure e through the accounts system, offering the excuse that there was not enough time left to put these projects out to tender when they were caught out.” Roets said he hoped that the government was serious about zero rating more goods and services that were used by the poor to reduce their debt burden.
“However, the finance minister wants to spin the tax increases, the reality is that everybody is now being penalised to fill the gaping fiscal hole left almost a decade of misrule by an incompetent president and his captured cohorts,” Roets said more than half of all South Africans were three months or more behind in their debt repayments, collectively owing some R73 trillion in debt (latest National Credit Regulator stats).
“We have gone past the point where consumers who aspire to join the ranks of the middle class can dream of achieving that goal. The new aspirations to put sufficient food on the table to avoid family members going to bed hungry. “It has now become a matter of survival. Opening more accounts and acquiring more storecards and credit cards is absolutely not the answer. Neither is the taking on of more unsecured debt at astronomically high interest rates the solution”
“South African consumers have consistently notched up the unenviable reputation as having one of the highest debt ratios as a percentage of GDP among emerging market economies. It is timethat wetry to get rid ofthat perception by becoming more savings conscious,howeversmall the monthly savingmaybe,”