Alternatives to Austerity: Revenue options to raise the maximum available resources

The IEJ’s policy brief, Alternatives to Austerity: Revenue options to raise the maximum available resources, highlights government’s failure to mobilise the maximum available resources. The policy brief unpacks and details sources of revenue that continue to sit idle. It argues that by leveraging available resources effectively, government can avoid debilitating budget cuts and steer the budget towards sustainable economic growth and social development.

Introduction

In the past decade, National Treasury has slashed crucial social service spending, citing fiscal constraints. Yet, government has not fully tapped into all available resources open to it. Tax rates have declined, wealth remains undertaxed, and billions are squandered annually on ineffective policies. This policy brief identifies untapped revenue streams, such as taxing wealth and financial transactions, totalling billions. Recommendations include restoring Corporate Income Tax rates, reducing tax breaks for the wealthy, and discontinuing ineffective incentives. We advocate for leveraging reserves and renegotiating debt terms. It’s time to prioritise sustainable economic growth by maximising available resources.

Raising the maximum available resources (MAR)

The principle of maximising available resources is not just a logical imperative but also a legal obligation. South Africa, bound by both its Constitution and international agreements, is obligated to utilise all feasible means to fulfil its socioeconomic responsibilities. However, current fiscal policies fall short of meeting these obligations. This brief calls for a paradigm shift towards proactive resource mobilisation, encompassing comprehensive tax reforms, prudent debt management, and strategic allocation of funds. By embracing the MAR principle, we can create a more equitable and resilient economic framework.

Current government efforts and potential reforms

South Africa’s fiscal landscape is predominantly shaped by tax revenue, loans, and cash reserves. However, the over-reliance on taxation underscores the need for a thorough reassessment of our revenue generation strategies. This brief advocates for targeted reforms, including reinstating Corporate Income Tax rates, curbing tax exemptions for the affluent, and phasing out ineffective incentives. Additionally, we propose leveraging existing reserves, renegotiating debt terms, and exploring innovative financing mechanisms. These measures are essential for unlocking untapped resources and fostering sustainable economic growth.

Conclusion

In conclusion, maximising available resources is not just a policy option but a moral imperative. By adopting proactive fiscal strategies and embracing equitable taxation, South Africa can overcome its current fiscal challenges and pave the way for inclusive economic development. This policy brief offers a roadmap for policymakers to navigate the complexities of resource mobilisation and chart a course towards a more prosperous and resilient future. It’s time to prioritise the well-being of our citizens and build an economy that works for everyone.