South Africa’s latest budget debate has exposed a fault line which has existed for decades—one that separates those who seek pragmatic solutions from those who merely perpetuate crises of their own making.
The Democratic Alliance (DA) and Freedom Front Plus approached the budget debate with a conditional and constructive stance: temporary tax increases, yes, but only if accompanied by bold reforms to stimulate growth, cut wasteful spending, and put the country on a sustainable economic path. The African National Congress (ANC) refused and most of its GNU lackeys went along.
This rejection is telling. It suggests that the ANC is not truly interested in fixing the structural problems it created. Rather than implementing deep reforms, it continues to look to the taxpayer as an ATM to support its inefficiencies.
A Decade of Fiscal Decay
South Africa’s economic struggles are not a mystery – they are the predictable outcome of mismanagement, corruption, and an unwillingness to take tough decisions. Over the past decade, government spending has ballooned while economic growth has stagnated. The state’s wage bill is among the highest in the world relative to GDP, yet service delivery continues to deteriorate. Eskom, Transnet, and other state-owned entities remain dysfunctional, despite endless bailouts.
In such a context, raising taxes without implementing reforms is not just ineffective but it is immoral (by ANC standards some might even say treasonous). It punishes citizens for the failures of the ANC while reinforcing a cycle of dependency and waste.
Moreover, it pushes South Africa ever closer to the looming taxation tipping-point which the Laffer Curve warns of. Its logic is simple: past a certain threshold, taxation discourages economic activity. When businesses and individuals feel overburdened, they respond in predictable ways, investing less, spending less, or − if they are able − moving their capital elsewhere. South Africa already suffers from capital flight.
The DA’s Rational Approach
The DA’s proposal acknowledged that South Africa’s fiscal crisis requires immediate intervention. Crucially, it insisted that any tax hikes must be temporary and conditional upon reforms that expand the economy. This is a sound principle: growth, not taxation, is the only sustainable path out of economic decline.
Among the measures the DA proposed were:
- Cutting wasteful expenditure, reducing the bloated government payroll, slashing luxury spending by officials, and ending bailouts for failing state-owned enterprises.
- Boosting private sector growth by easing restrictive labour laws, encouraging investment, and allowing more private competition in key industries like energy and logistics.
- Ensuring accountability by strengthening anti-corruption mechanisms so that additional revenue is not siphoned off into patronage networks.
The ANC’s response? A flat refusal. No reform, no restructuring—just higher taxes to prop up a broken system.
The refusal to embrace reform affects ordinary South Africans, small-business owners trying to stay afloat, workers struggling to keep up with rising costs, and the unemployed, who see no new opportunities in a stagnant economy.
The ANC’s tax-and-spend approach disproportionately harms the poor. VAT increases, for example, raise the cost of living for everyone, but they hit lower-income households the hardest because they spend the biggest portion of their income on basic necessities to survive. The government’s insistence on tax hikes without reform effectively amounts to a wealth transfer − not from rich to poor, but from the productive sector to an inefficient bureaucracy.
The Psychological Trap of “Just One More Tax Hike”
Governments, like individuals, can fall into patterns of addiction. For some, it’s the lure of power, for others, the comfort of ideological certainty. But for struggling political parties like the ANC, the addiction is taxation − an endless cycle of taking more while fixing less. Each time a shortfall looms, the response is the same: just one more tax hike. Just a little more from the people’s pockets, and everything will be all right.
It’s the gambler’s fallacy applied to statecraft. Picture a man at a casino, down by a staggering amount but convinced that one more bet will turn it all around. It never does. The ANC, like that gambler, is trapped in a cycle of self-deception. Past tax hikes have not fixed the economy, but instead of re-evaluating its approach, the government doubles down. Each increase is justified as a temporary measure, yet they all become permanent. VAT was meant to stay at 14% − then it became 15%. Now the government proposes 16%. Where does it end? This ‘temporary measure’ is but one of the many fallacies which the ANC clings to.
And the consequence is that investors, both local and foreign, take note of governments that cannot break their dependency on taxation. In an era where capital is mobile and businesses can relocate, countries that continually raise taxes without fixing their fundamentals risk eroding their own economic base. Instead of creating an environment that attracts investment and fosters growth, the ANC’s approach tells businesses: “We will always demand more from you, but we will never demand more from ourselves.”
Dodging DOGE
In this budget’s news cycle it has been repeated endlessly that South Africa does not have an income problem, it has a spending problem. South Africa’s government already extracts vast sums in taxes, yet public services remain abysmal. The real crisis isn’t revenue − it’s waste.
South Africa really could do with its own DOGE − a ruthless bureaucratic watchdog with a single mission: to cut through the layers of inefficiency, waste, and outright absurdity that define much of our public sector. Imagine an official with the authority to audit, streamline, and slash unnecessary spending wherever it lurks, whether in the overpaid boardrooms of failing SOEs or the procurement contracts that somehow turn R500 brooms into R50 000 invoices.
The idea of a DOGE isn’t just a Donald Trump theatrical move. Many successful countries like Singapore and Denmark, known for their lean and effective governance, have built their public sectors around efficiency and have established departments ensuring government efficiency. South Africa, by contrast, has normalised bloated bureaucracies and redundant government programmes that seem designed more for job creation within the state than for actual service delivery. If every government department faced scrutiny from a dedicated efficiency czar, how much taxpayer money could be saved? How many failing projects would be scrapped before they became multi-billion-rand sinkholes?
So the question is: if the DA’s proposals are pragmatic and economically sound, why is the ANC so resistant? The answer is unlikely to be found in Treasury’s spreadsheets but rather in the uncomfortable realities of power and patronage.
A DOGE would serve another vital function of exposing the incentives that keep inefficiency alive. The reason waste persists is not because the state doesn’t know better; it’s because wastefulness is often politically useful. A bloated public sector means more jobs for cadres, inflated contracts mean kickbacks, and inefficiency itself becomes an excuse for more funding. The ANC’s refusal to cut spending is not an economic miscalculation − it is a survival strategy.
Reforming the state − cutting waste, reducing inefficiencies, and opening industries to competition − would mean stripping away the layers of political networks that the ANC has relied on for decades.
In other words, real economic reform would mean unraveling the very structures that keep the ANC’s and their cadres’ bank accounts full. This is why, despite economic logic pointing to reform, the party resists. It is not that members fail to understand the necessity of these measures − it is that implementing them threatens their own survival.
The Bigger Question
We should ask of our political parties: ‘Who should bear the consequences of South Africa’s economic failures? The ANC’s answer is clear: the citizens must pay, while the government (and their patronage network specifically) carry on as usual. The DA, at least, is offering an alternative − one that demands accountability before reaching into the pockets of the people.
[Image: Pete Linforth from Pixabay]
The views of the writer are not necessarily the views of the Daily Friend or the IRR.
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