Grants place huge burden on taxpayers

Cape Town - South Africa now has more people on social welfare than with jobs and the country's tax base may not be able to keep pace with the ever-growing number of grant beneficiaries, warns the South African Institute of Race Relations (SAIRR).

According to the research body's statistics, there were 330 people with jobs for every 100 people on social welfare in 2001. By 2012, the ratio had dropped to 90 people in employment for every 100 social welfare beneficiaries.

SAIRR acting head of research Lerato Moloi said: "If this trend continues, South Africa’s tax base will not grow fast enough to keep supporting the millions of vulnerable individuals who rely on monthly cash transfers from the state."

Between 1994/95 and 2010/11, the nominal value of tax revenue grew by 491%, from R114bn to R674bn. In the same period, the nominal value of social grant expenditure grew by 700%, from R11bn to R88bn.

With over 16 million social grant beneficiaries in 2013/14, social grant expenditure is expected to rise to about R113bn this financial year.

The highest proportions will be spent on old age pension and child support grant transfers, at 39% and 37% respectively.

The National Development Plan estimates that about 2.1 million children who are eligible for the child support grant are not receiving it. If all eligible children received this grant, it would push social grant expenditure up by more than R500m.

Despite its impact in lifting households out of poverty, such an extensive a social grant system in a society where unemployment has doubled since 1994 puts a strain on the country’s tax base, the SAIRR cautions.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24
Rand - Dollar
Rand - Pound
Rand - Euro
Rand - Aus dollar
Rand - Yen
Brent Crude
Top 40
All Share
Resource 10
Industrial 25
Financial 15
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders