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Real Tax Cuts: Maximizing Revenue and Efficiency in Fiscal Policy

Explore the economic overview, revenue contributions, spending priorities, education, health, and defense expenditure trends for effective fiscal planning. Analyze tax cuts impact and the importance of balancing revenue and expenditure for long-term sustainability.

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Real Tax Cuts: Maximizing Revenue and Efficiency in Fiscal Policy

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  1. Time for Real Tax Cuts Presented by: Dawie Roodt 23 January 2007

  2. Dawie Roodt Chairman and Chief EconomistEfficient Group81 Dely RoadHazelwood0081Tel: (012) 460-9580Cell: 082 456 0204Email: dawie@efgroup.co.za

  3. Economic Overview

  4. Economic Overview

  5. Background

  6. Background

  7. Background Trevor’s reign! Gold

  8. Background

  9. Background

  10. …Contributed to

  11. Inflation

  12. Capital Expenditure

  13. GDP at Market Prises

  14. Consumption Expenditure by Households

  15. Summary • Increase Revenue • Decrease Expenditure • Boast Supply • Increase consumption expenditure • Saving (government vs households)

  16. FISCAL 2006/07…

  17. Revenue

  18. Contribution to Fiscus

  19. 2006/07 in Review:Revenue * Estimated

  20. Tax Table

  21. Effect of Adjustment

  22. Quick Calculation • 1995: Revenue (22.5% GDP) • 2005: GDP (fiscal): R1,417bn • 22.5% of GDP = Revenue (2005): R319bn • Actual Revenue: R347bn • Difference: R28bn Where is the tax cuts?

  23. Expenditure

  24. Spending Priorities

  25. 2006/07 in Review:Expenditure * Includes: Contingency Reserve (R3.1bn)

  26. Main Expenditure trends • More for Education and Health • Services delivery to get more and more • Capital spending • World Cup • Housing • Let’s hope; safety and security - World Cup Higher revenue helps spending higher – danger!!

  27. Close-up on South Africa (2004) Source: Unesco and World Bank Development Indicators

  28. Education

  29. Education expenditure comparison (2002-2004 as available) Lesotho South Africa Equatorial Guinea Source: Human Development Report, 2006 (undp.org)

  30. Adult Literacy Rate (2004) Estonia South Africa Mali Source: Human Development Report, 2006 (undp.org)

  31. Pass Rate of SCE and Matriculation Exemption Source: HSRC

  32. Pass Rate of SCE and Education Spending Source: HSRC

  33. Learners Presenting For Standard and Higher Grade Exams Source: HSRC

  34. Case Study: Flow of Pupils from Grade 1(1991) to Grade 12 (2002) Home Schooling? 1 207 066 learners 486 786 learners Note: Repeaters and drop outs not indicated Source: HSRC

  35. Pupils-Teacher Ratio in Primary Education (Newest data available) Central African Republic Libya Weighted Average: 27.1 South Africa Source: UNESCO

  36. Home Schooling • 1999: Between 6 000-10 000 parents giving home schooling • 2001: 15 000 parents • Reason: • “Quality of education in public schools is low” • “Implementation of outcome based education” • “Marks ‘adjusted’ for better results“ • Research conclusions: Gr.4 pupils in home schooling perform better than above average pupils in public schools Source: Tydskrif vir Geestenswetenskappe, Beeld 30 November 2006

  37. Health

  38. Public Expenditure on Health comparison (2003-04) Iceland South Africa Myanmar Source: Human Development Report, 2006 (undp.org)

  39. Health Spending as %GDP Source: Various Budgets

  40. Life Expectancy at Birth (years)most recent 2000-05 Japan Swaziland South Africa Source: Human Development Report, 2006 (undp.org)

  41. Number of HIV positive and cumulative HIV deaths Source: Centre for Actuarial Research and South African Medical Research Council, 2004

  42. Estimated HIV prevalence amongst antenatal clinic attendees, by age Source: Avert international AIDS charity

  43. Defence and Police

  44. Protection Services Spending as %GDP Source: Various Budgets and own calculation

  45. Reported Crime Figures for the financial years 1994/95 to 2002/03 Source: Institute for Security Studies (issafrica.org)

  46. Fast Crime and Policing Facts: • Change in different crimes 1994-2003: • Rape and attempted Rape: 17.2% • Murder: -17.0% • Robbery with aggravating circumstances: 49.7% • Policing Expenditure • % GDP: 2.0% (1994), 1.8% (2003) • % budget expenditure: 6.7% (1994), 7.9% (2003), 7.8% (2007 est) Source: Institute for Security Studies (issafrica.org) / own calculations

  47. Police (per capita) by country (2000) Montserrat Costa Rica South Africa Source: United Nations Office on Drugs and Crime, Centre for International Crime Prevention

  48. Defence Spending

  49. Funding

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