{"id":816250,"date":"2025-03-11T16:00:00","date_gmt":"2025-03-11T14:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=816250"},"modified":"2025-03-11T15:28:37","modified_gmt":"2025-03-11T13:28:37","slug":"the-government-is-secretly-taking-money-from-south-africans","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/816250\/the-government-is-secretly-taking-money-from-south-africans\/","title":{"rendered":"The government is secretly taking money from South Africans"},"content":{"rendered":"\n

The South African government imposes a hidden tax on South Africans by printing money, which erodes the value of the local currency and eats away at citizens\u2019 money.<\/p>\n\n\n\n

Finance Minister Enoch Godongwana\u2019s 2025 Budget, set to be delivered on 12 March 2025, is highly anticipated as it will reveal how the government will address the budget deficit.<\/p>\n\n\n\n

The Finance Minister was initially set to deliver his 2025 Budget Speech in Parliament on Wednesday, 19 February 2025.<\/p>\n\n\n\n

However, a dispute over a planned two percentage point value-added tax (VAT) increase stopped this budget in its tracks.<\/p>\n\n\n\n

Numerous cabinet ministers opposed the VAT increase, saying it would harm economic growth and hurt the poor people.<\/p>\n\n\n\n

This caused Godongwana to postpone the 2025\/26 annual budget to Wednesday, 12 March 2025, the first time this has happened in democratic South Africa.<\/p>\n\n\n\n

He explained that this postponement will give stakeholders time for further deliberations within the Government of National Unity (GNU).<\/p>\n\n\n\n

Many stakeholders want the finance minister to cut state expenditures instead of raising taxes, which are detrimental to economic growth.<\/p>\n\n\n\n

However, others support raising taxes to fund social development programmes, like the Social Relief of Distress (SRD) grant.<\/p>\n\n\n\n

Godongwane explained that the VAT increase to 17% was needed to raise an additional R58 billion to address its spending needs.<\/p>\n\n\n\n

He said this money was needed to fund public sector wage increases, expand early childhood development, and retain teachers and doctors.<\/p>\n\n\n\n

The money was also needed to revitalise the commuter rail system and provide above-inflation increases to social grants.<\/p>\n\n\n\n

Most economists said that instead of raising taxes, the government should cut spending to ensure it creates a budget surplus.<\/p>\n\n\n\n

Over the past thirty years, bloated employee compensation, government grants, and debt have constrained the national budget.<\/p>\n\n\n\n

Instead of focusing on economic growth, the government raised taxes to cover its growing expenses.<\/p>\n\n\n\n

Efficient Group chief economist Dawie Roodt said South Africans are now heavily overtaxed, and raising personal income or company tax is not viable.<\/p>\n\n\n\n

He said the government should start cutting expenses and could start with salaries and wages. He said most government employees are overpaid and underworked.<\/p>\n\n\n\n

He added that the government could cut spending on state-owned enterprises and close many unnecessary departments.<\/p>\n\n\n\n

Secret way the government takes money from citizens<\/h2>\n\n\n\n
\"\"<\/a>
Renowned economist Milton Friedman<\/figcaption><\/figure>\n\n\n\n

Most South Africans do not consider the money supply and inflation when debating state spending and raising taxes.<\/p>\n\n\n\n

Renowned economist Milton Friedman said that the actual tax on people is what the government spends and not the taxes it collects.<\/p>\n\n\n\n

When the government spends more than it collects in taxes, known as a deficit, it must find a way to finance that spending.<\/p>\n\n\n\n

Printing money is a popular way for the government to fund its spending. However, this strategy has consequences.<\/p>\n\n\n\n

Excessive money printing causes inflation and erodes the purchasing power of money. Because of this, the money people earn and save can buy less.<\/p>\n\n\n\n

Friedman said that the government printing money is a form of hidden taxation as the citizens pay the price for government spending.<\/p>\n\n\n\n

Economist Thomas Sowell said that inflation, which is caused by the central bank printing more money, should be seen as a hidden tax.<\/p>\n\n\n\n

He explained that this hidden tax is not only confined to the rich. The weaker currency affects all citizens.<\/p>\n\n\n\n

It raises the question of how much money South Africa\u2019s government has been printing over the last thirty years and what effect it has had on inflation.<\/p>\n\n\n\n

South Africa\u2019s total money supply increased from R244.2 billion in 1994 to R5.1 trillion in 2023, a 21-fold increase over three decades.<\/p>\n\n\n\n

South Africa\u2019s average inflation rate since 1994 has been 5.9% per annum. This means that R1 in 1994 had the same purchasing power as R5.20 today.<\/p>\n\n\n\n

This erosion in the value of the rand is a secret tax the government imposed on South African citizens to fund its excessive spending.<\/p>\n\n\n\n

\n\n\n\n

South Africa’s Money Supply<\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n
\n\n\n\n

Inflation in South Africa, shown as the relative value of a rand<\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n
\n","protected":false},"excerpt":{"rendered":"

The South African government imposes a hidden tax on South Africans by printing money, which erodes the value of the local currency and eats away at citizens\u2019 money.<\/p>\n","protected":false},"author":10,"featured_media":713112,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[21747,17448,21799,7530,21970,21969],"class_list":["post-816250","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-2025-budget-speech","tag-enoch-godongwana","tag-finance-minister-enoch-godongwana","tag-inflation","tag-milton-friedman","tag-money-supply"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/816250","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=816250"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/816250\/revisions"}],"predecessor-version":[{"id":816289,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/816250\/revisions\/816289"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/713112"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=816250"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=816250"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=816250"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}