We owe the state at least R180bn

2015-03-15 15:00

South Africans owe the taxman, municipalities and road authorities a whopping R180?billion – at least – in back taxes, fines and municipal accounts.

And, while the debt pile gets larger,the possibility that government will recover even half of it gets slimmer.

Experts say the country’s sluggish economy pushes millions of South Africans deeper into the red, while a growing culture of deliberate nonpayment – as in the case of Gauteng’s e-tolls, which has stacked up an additional heap of unpaid debt in the province – bodes ill for the country.

Over the past two weeks, City Press’ sister paper, Rapport, has scrutinised the most recent financial statements from several metros and smaller municipalities, annual reports from the SA Revenue Service (Sars), figures on unpaid traffic fines and research from Treasury to determine how much money South Africans owe government and how severe their debt burden is.

While the outstanding debt to the state by households and businesses has grown dramatically over the past four years, Sars and municipalities simply write off more bad debt every year.It is going so badly with the collection of debt for traffic fines that some traffic authorities recover only 20% of the money motorists owe them.

The research indicated that overdue debt to the country’s 278 municipalities was a massive R94?billion by the end of June. Most of it was household debt (almost R58?billion), followed by businesses and industries (almost R20?billion), government institutions (R4.5?billion) and “other” debtors (almost R12?billion).

By far the largest section of outstanding debt to municipalities fell into the category of debts older than 90 days, and arrears were increasingly moving into this category. Old debts such as these are particularly difficult to collect.

Between 2010-2012, R50?billion (77%) of the R65?billion South Africans owed municipalities was more than 90 days overdue. A frightening R75?billion (80%) of debt owed to municipalities was older than 90 days by the end of 2013/14.Households, businesses and government institutions are falling increasingly behind in their municipal-debt payments. Household debt older than 90 days increased 44%, from R34?billion in 2010/11 to R49?billion in 2013/14.

Business-enterprise debts older than 90 days drastically increased and now amount to nearly R13?billion, an increase of 63% from 2010/11.Outstanding municipal debt older than 90 days owed by government institutions increased by a shocking 75%, from R2.1?billion in 2010/11 to R3.7?billion in 2013/14.

The bad debt municipalities must annually write off is rising dramatically. Rapport scrutinised the annual reports of 20 municipalities, including that of the country’s eight metros. The 20 municipalities wrote off bad debt totalling R4.3?billion in 2013/14, 32% more than the R3.2?billion written off by the same municipalities in 2012/13.Taxpayers owed Sars a total of R82?billion at the end of the 2013/14 financial year.

Of this, R16?billion (20%) was more than four years overdue, and R27?billion (32%) was between one and four years overdue. The amount of bad debt written off by the taxman every year has more than doubled in four years. Sars had to scrap R6?billion in bad debt in 2010/11, compared with nearly R15?billion in 2013/14.South African motorists now owethe Johannesburg, eThekwini (Durban), Cape Town and Ekurhuleni metros more than R5?billion in outstanding fines.

Overdue e-toll payments in Gauteng by the end of 2013/14 amounted to R782?million and the payment rate for e-toll accounts dropped between June and December.Unpaid traffic fines are starting to pile up around the country and several municipalities expressed in their annual reports that they were fighting a losing battle.The rate of payment for traffic fines in Cape Town, where motorists now owethe metro R1.2?billion, has dropped from 35% in 2009/10 to 20% in 2013/14.

Speedsters and other traffic offenders in Johannesburg and Durban owethe metros R2?billion and R1.7?billion, respectively, in overdue fines.The rate of unpaid fines in Ekurhuleni more than doubled between 2011/12 and 2013/14.

The department of cooperative governance and traditional affairs said it was aware South Africa’s outstanding debt to municipalities was starting to accumulate. It said the “slow economy” contributed to the fact that municipal services for many households were now less affordable.

“A national campaign to encourage citizens to pay for services and settle outstanding debts will be undertaken in the current financial year,” the department wrote in an email.Sars spokesperson Marika Muller said the taxman depreciated about 18% of its debt last year.She said the money owed to Sars stayed on its books for a long time because it was disputed by debtors

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