RESOURCING FOR RIGHTS REALISATION ALTERNATIVES TO AUSTERITY

This policy brief by the Institute for Economic Justice (IEJ) argues that the South African government has failed to raise the maximum available resources (MAR) to fund essential social services, leading to unnecessary austerity. The document identifies numerous tax and non-tax revenue streams—including wealth taxes, the removal of ineffective tax breaks, and the utilization of the Gold and Foreign Exchange Contingency Reserve Account (GFECRA)—that could provide hundreds of billions of rands to avoid budget cuts and stimulate economic growth.

• The South African National Treasury has cut hundreds of billions of rands from essential social services over the last decade, citing a lack of fiscal resources, while failing to fulfill its legal obligation to raise the maximum available resources (MAR) as required by the Constitution and the International Covenant on Economic, Social, and Cultural Rights (ICESCR).
• Personal Income Tax (PIT) effectiveness has declined due to falling effective tax rates and significant tax expenditures. Between 2011 and 2023, an average of 16% of gross personal income was not taxed, with the majority of benefits accruing to high-income earners through retirement and medical scheme contributions.
• Corporate Income Tax (CIT) has been significantly reduced, falling from nearly 50% to 27%, with the IEJ arguing that the recent drop from 28% to 27% was unjustified as there is no evidence that the 28% rate hindered private investment. The effective marginal rate on corporate income in South Africa (17.65%) is below the median for upper-middle income countries.
• The document identifies several specific tax-based revenue opportunities: a Net Wealth Tax could raise between R70 billion and R160 billion; a Financial Transactions Tax could raise over R40 billion; a sliding-scale Social Security Tax could generate R64 billion; and a Resource Rent Tax could raise R38 billion.
• Significant non-tax resources are available, most notably the Gold and Foreign Exchange Contingency Reserve Account (GFECRA), which had a surplus of over R497 billion by the end of 2023. The IEJ recommends drawing down a portion of these funds to support state-owned enterprises (SOEs), capital expenditure, and social support.
• The IEJ advises against raising the general Value-Added Tax (VAT) rate, noting that the 2018 increase from 14% to 15% failed to meet revenue projections and disproportionately burdens the poor. Instead, it proposes a 25% luxury VAT rate on goods accessed only by the wealthy, which could raise approximately R9 billion.
• To reduce the cost of borrowing, the document recommends shifting debt to medium-term bonds, negotiating debt restructuring and 'haircuts' with Eskom creditors, and instituting prescribed assets that require institutional investors to hold government-specified assets.

APA

Institute for Economic Justice (2024). RESOURCING FOR RIGHTS REALISATION ALTERNATIVES TO AUSTERITY. https://iej.org.za/wp-content/uploads/2024/02/IEJ-policybrief-AlternativesToAusterity-feb2024.pdf

Chicago

Institute for Economic Justice. RESOURCING FOR RIGHTS REALISATION ALTERNATIVES TO AUSTERITY. 2024. https://iej.org.za/wp-content/uploads/2024/02/IEJ-policybrief-AlternativesToAusterity-feb2024.pdf.

Wikipedia

{{cite report |author=Institute for Economic Justice |title=RESOURCING FOR RIGHTS REALISATION ALTERNATIVES TO AUSTERITY |date=February 2024 |url=https://iej.org.za/wp-content/uploads/2024/02/IEJ-policybrief-AlternativesToAusterity-feb2024.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{instituteforeconomicjustice2024resourcing, author = {{Institute for Economic Justice}}, title = {{RESOURCING FOR RIGHTS REALISATION ALTERNATIVES TO AUSTERITY}}, institution = {Institute for Economic Justice}, year = {2024}, month = feb, url = {https://iej.org.za/wp-content/uploads/2024/02/IEJ-policybrief-AlternativesToAusterity-feb2024.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }