Financial instability of SA households an ‘economic time bomb’

2012-04-20 13:19

The results of the Momentum Household Net Wealth Report shows that we’re sitting on an economic time bomb, the Freedom Front Plus has said.

“The FF Plus is especially concerned that the government is currently putting such high tax pressure on households that a critical tipping point may be reached,” party finance spokesperson Conrad Beyers said today.

His warning followed the release yesterday of the Momentum Household Net Wealth Report, which found that half of South African households fell into the “drifting unwell” category.

Beyers said: “This means that the financial position of these households can easily deteriorate if economic circumstances worsen.”

The report found that 30% of households were classified as “drifting well” – which meant they were also unstable and could shift up or down a category quite easily. Beyers said this meant that the financial position of 80% of households ranged from moderately to severely unstable, leading to “an economic time bomb”.

“The government’s socialist ‘tax and spend’ approach holds the single largest threat to households in this danger zone,” he said.

“A financially unstable middle class implies an unstable tax basis and the government should realise how important it is to protect households financially, rather than choking them through taxes.”

The financial pressure government was putting on taxpayers included high fuel taxes, double taxation such as toll fees, and unsustainable social programmes such as social grants. Poor service delivery was another burden.

“Households are forced to incur costs in order to make up for an absence of service delivery for which they pay tax, for example additional costs for household safety due to government not fulfilling that duty,” Beyers said.

The index was compiled for Momentum by Unisa’s Bureau of Market Research and Personal Finance Research Unit. A nationwide survey was conducted among 2 937 South African households in the second half of last year. 

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