2008-11-17 00:00

South Africans are notoriously reluctant to save. The news that the country’s savings rate dropped into negative territory in the second quarter of this year is highly alarming, especially as end-of-year festivities and traditional overspending are imminent.

Similar disquieting news comes from two international credit rating agencies. They have adjusted South Africa’s outlook from stable to negative in the light of a looming world recession. Given the fact that South Africa is historically dependent upon foreign investment for development, this has implications for employment levels.

There is clearly a need to save, not only for individual futures but also for that of the country. Yet those who do so are penalised by taxation. Asked about this recently, all the Minister of Finance Trevor Manuel could manage was the feeble old joke that death and taxes are unavoidable. Changing circumstances require a rethink: the taxman should provide greater encouragement to savers.

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