Spending cuts not the only way to curb economic crisis

The Institute for Economic Justice criticizes the South African National Treasury for presenting expenditure cuts as the only solution to a 'fiscal cliff'. The author argues that austerity leads to the collapse of critical services, increased poverty, and long-term GDP decline. Proposed alternatives include removing tax breaks for high earners, returning the corporate income tax rate to 28%, and lowering borrowing costs through state-mandated lending and capital controls.

• The National Treasury is accused of orchestrating a campaign of fear regarding a 'fiscal cliff' and 'debt blowout' to justify unpopular spending cuts while ignoring other budgetary options such as raising taxes or increasing borrowing.
• Budget cuts in South Africa are linked to the failure of critical services; for example, in the Eastern Cape as of October 2022, over a third of posts were vacant and only 447 of 671 required ambulances were operational.
• Austerity policies have historically increased inequality and poverty globally, with research indicating that fiscal contractions larger than 1.5% of GDP result in a negative effect of over 3% on GDP even after 15 years.
• South Africa can raise significant revenue by removing subsidies for retirement provisions (R97bn) and removing medical aid tax credits for those earning over R500,000 per annum (R6.4bn), as well as returning the corporate income tax rate to 28%.
• South Africa's debt-to-GDP ratio of 71.4% in 2022/2023 is comparable to the emerging market average of 69%, but borrowing costs are disproportionately high (10-12%) compared to other emerging markets (7-8%).

APA

Isaacs, Mncube, & Mdutyana (2023). Spending cuts not the only way to curb economic crisis. Institute for Economic Justice. https://iej.org.za/press-room/in-the-media/spending-cuts-not-the-only-way-to-curb-economic-crisis/

Chicago

Isaacs, Mncube, and Mdutyana. Spending cuts not the only way to curb economic crisis. Institute for Economic Justice, 2023. https://iej.org.za/press-room/in-the-media/spending-cuts-not-the-only-way-to-curb-economic-crisis/.

Wikipedia

{{cite press release |last1=Isaacs |last2=Mncube |last3=Mdutyana |title=Spending cuts not the only way to curb economic crisis |publisher=Institute for Economic Justice |date=9 September 2023 |url=https://iej.org.za/press-room/in-the-media/spending-cuts-not-the-only-way-to-curb-economic-crisis/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@misc{isaacs2023spending, author = {Isaacs and Mncube and Mdutyana}, title = {{Spending cuts not the only way to curb economic crisis}}, publisher = {Institute for Economic Justice}, year = {2023}, month = sep, url = {https://iej.org.za/press-room/in-the-media/spending-cuts-not-the-only-way-to-curb-economic-crisis/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }