Well, you are probably expecting this article to be about Nkandla, or maybe E-tolls, or maybe it is about that sign language interpreter, but in fact there is a bigger trick going on beneath our noses.
So lets start with some basics. Our politicians make promises every election - such as free education, free medical aid etc. Of course, there is no such thing as a free lunch and although we "provide" those services they are really paid for through taxes. Simple enough so far.
We have a R1 trillion annual budget but only generate R750 billion in taxes. So where does the extra cash come from ? Well our government sells "bonds" - a promise to pay someone back with interest at some future date.
In essence the government borrows money from the future to pay for things now - much like we borrow to buy a house. This would be ok if the money raised by those bonds went into assets such as power stations and roads or we were creating new jobs with it.... But let me not become sidetracked too early.
In 2013 South Africa has raised R250 billion in bonds increasing our total debt to R1.2 trillion. The budget plans to borrow an additional R497 billion over the next three years which will increase our debt to R1.7 trillion. How are we going to pay this back ?
Government actually has no intention of paying this back... They can't - they spend more than they earn ... All we plan to do is pay back the interest. And so what happens ? The bonds and loans become due and guess what.... we issue MORE bonds to pay for the old bonds.
Our net debt in 2007/08 was R483 billion... we have TRIPLED it under the current regime to R1.2 trillion and will increase it again to R1.7 trillion over the next three years... think about that.... Borrow R497 billion to pay back R300 billion in interest, and we still have to pay back the principal of R1.7 trillion ! In other words our borrowing has reached the point where the loans are being paid off by more loans.
So what does it all mean ? It means that we are paying taxes to pay interest. And as the interest rises, we pay more and more of our tax money to paying interest. Or put another way, the proportion of our taxes which goes to paying interest is growing all the time. Future generations will have to pay even MORE tax to cover the interest costs.
What it also means is that large amounts of money - interest leaves the country - and does so forever at MUCH greater levels than say e-tolls achieves. And like that family that pays one credit card off with the other, the debt becomes huge. This is how you land up being a Cyprus.
Frankly this interest machine is sheer genius with respect to shifting wealth from the many poor and middle class people of SA to the wealth elite of the world who own the banks who earn the interest. Biggest SCAM ever.
So to all my ANC, DA, EFF, AGANG, the Booi's and Mashilo's and the other political aspirants - what ARE you going to be doing about this ? Your answer SHOULD be what we as a country are talking about and debating .... and SHOULD ultimately be what your vote in 2014 is about.
PS. The government plan is to .... print more money ... and simply devalue everything you earn. To those defenders of the poor, the unions, the politicians and ordinary citizens ... this is why the poor can never earn enough, the reason why petrol is through the roof, and the reason why e-tolls as a new tax form are being implemented.
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