Magazine article New African

South Africa: Manuel Delivers the Goods. (Economy in Brief)

Magazine article New African

South Africa: Manuel Delivers the Goods. (Economy in Brief)

Article excerpt

South Africans of all races woke up in mid-February grinning from ear to ear after the minister of finance, Trevor Manuel, read his budget for 2002. It was universally praised across the political spectrum. Years of impeccable housekeeping had ensured that the government had a huge surplus to splash out. A quarter of a trillion rand was up for grabs.

Most of it came from the excellent work done by the South African revenue service, which collected R15bn in excess of the expected R238bn revenue.

This enabled the government to cut taxes by significant margins that progressively put more money back into the pockets of the lower and middle income earners. Even the rich had cause to smile. The top marginal rate of 42% of earnings was cut to 40%.

It was described as a fiscal miracle by some, a move from the apartheid vicious cycle of borrowing money to pay off interest on borrowing, to a virtuous cycle of sound economics.

Manuel said that the prudent fiscal and debt management policies since the ANC came into power would enable him to increase spending on poverty alleviation, infrastructure development and crime prevention. …

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