Our research on SA’s fiscal position, published in the Tydskrif vir Geesteswetenskappe, indicates that SA is heading for a fiscal cliff if the present trends in social assistance expenditure and the growth rate in public service remuneration continue. If historic trends continue all government revenue will be used for these two expenditure items by 2026.
In the medium-term budget policy statement in October, Finance Minister Nhlanhla Nene indicated that the government was aware of a looming fiscal cliff. One of the ways in which the government aims to avert it is by increasing government revenue by about R44bn over the next three fiscal years to 2017-18.
Raising an additional R44bn in revenue will place a considerable additional burden on an already overburdened tax structure. It is not said whether these are nominal or real amounts.