Welfare recipients outweigh taxpayers

Lihle Z Mtshali

Lihle Z Mtshali

One of the dilemmas Finance Minister Trevor Manuel needs to address in his mid-term budget today is how to balance more than two welfare recipients for every taxpayer.

South Africa has fewer than 5million individual taxpayers and almost 11million welfare beneficiaries, bringing the dependency ratio to 2,2 welfare beneficiaries for every tax payer. The country's spending on social welfare has grown to almost 3,5percent of gross domestic product.

Johan Botha, a senior economist at Standard Bank, said: "The growth in social spending was quite high in recent years by international standards and that rate of spending is just not sustainable."

Last year social spending was allocated R70billion, with increases of as much as 12percent for areas such as social security.

Economists expect this spend to go up by at least 9percent, bringing social spending for the 2007-08 fiscal year to about R75billion.

The mid-term budget sets the tone for the main budget.

Botha said the country's revenues were higher than budgeted and he expected Manuel to announce an increased surplus of about 1percent.