Guiding consumers since 2009

How failing parastatals negatively affect taxpayers

By Staff Writer
Some of the country’s largest state owned enterprises (SOEs) are in financial trouble. Daniel Silke, an independent political analyst, stated at the Mazars’ Cape Town Budget Review 2015/2016 notes that there are over 800 SOEs.
In the Budget Speech, Finance Minister Nhlanhla Nene explained that Eskom will be receiving a R23 billion capital injection. It was also proposed that a temporary increase in the electricity levy of two cents per kilowatt hour be implemented to assist with management of the utility, until the power shortage is over.
Di Seccombe, senior tax manager at Mazars, commented that South Africans will be paying more for a service that is in short supply. She questioned whether this increase in the electricity levy will go towards another Eskom bailout, which is not its purpose.
Professor Alwyn Louw, Monash South Africa Academic President, said: “The electricity tariff changes are but one example of changing consumer behaviour at an individual level to reward responsible behaviour. The combination will inevitably remove money from the household budget which reduces the ability to invest in savings.
“The expectation is that such a situation will assist to bring stability in the capacity and service delivery of Eskom. This will justify the investment by enhancing growth that will benefit the consumer. Failure to realise this will however imply a direct negative impact on the economy and individual taxpayers.”
The Treasury has also made guarantees to South African Airways (SAA) of R14.4 billion, “of which the airline has drawn R8.3 billion.”
The South African Post Office (SAPO) is also facing financial problems. According to the Budget Review 2015: “During 2014/15, a R1.7 billion going-concern guarantee and a R270 million guarantee to secure and extend its overdraft facility were issued with conditions linked to SAPO’s turnaround strategy.”
HB Klopper, associate professor of marketing and head of the marketing department at Monash South Africa highlighted that the failing of these SOEs has a negative effect on the tax payer.
“It has an adverse impact on the tax payer because of poor service delivery and the additional funds needed by companies that are funded by taxes to fund their business expenses. It removes money from investment in growth and drains money for stimulating growth, while it inhibits the growth potential of the economy due to the pressures it places on manufacturing and service delivery in general.
“Although large investments in providing parastatals with financial support have been announced (R23 billion in three instalments to Eskom) no long term solutions to have been announced as yet,” noted Klopper.

Recent Articles

Featured What’s the deal with underwriting?

When you apply for a long-term insurance policy, a financial adviser will ask some personal questions about your lifestyle, family history, health, and even ask you to take some medical tests. This process is called underwriting, but is it really necessary?


How are you taxed on your retrenchment package?

Unemployment is one of the biggest problems in South Africa. The emergence of the Covid-19 pandemic has exacerbated the situation with a lot of companies retrenching their employees.  When retrenched, you’ll receive a retrenchment package, but do you know how much tax you’re liable for?

Car repossessed – don’t be taken for a ride

When the country is facing an economic downturn, chances are your finances will feel the pinch. This can lead you to make bad financial decisions such as skipping your vehicle payments. But every decision has consequences and if you don’t pay your instalment, the bank will repossess your car. But what can you do when this happens?


Why you should consider gap cover

Your medical aid should protect you from incurring large medical bills when you’re sick. But what if your plan doesn’t cover the full cost of your medical expenses? We got in touch with insurance experts to find out whether gap cover is worth having.


Office furniture at discounted prices at BDK

Price: Available on request
When: Daily
Where: Johannesburg

Da Vincis Happy Hour Special

Price: Available on request
When: Daily
Where: Cape Town

Use your Absa card and get 30% cashback at Dis-chem

Price: Available on request
When: Daily
Where: Nationwide

Latest Guide

Guide to debt rehabilitation solutions