Image via: Adobe Stock
Image via: Adobe Stock
Following the latest supplementary budget, as announced by Finance Minister Tito Mboweni on 24 June, there has been some debate around how much tax revenue public servants will receive via their salaries.
On 26 June, just two days after Mboweni’s speech, Democratic Alliance (DA) Shadow Minister for Public Service and Administration Leon Schreiber claimed that out of every R1 paid in taxes, 58 cents would go towards paying the salaries of public servants. He also said the figure may increase to 61 cents.
“With salaries and debt devouring 80% of all tax revenue, only 20 cents out of every R1 paid in taxes is now available to pay for everything from social grants to education, healthcare and infrastructure development,” said Schreiber.
According to Africa Check, Schreiber said the main budget revenue for the 2020/2021 financial year would drop from February’s projected R1.398 trillion to R1.099 trillion.
He also said expenditure on compensation of employees would remain at the R638 billion projected in February 2020. Hence, how he came to 58% of the R1.099 trillion main budget revenue or 58 cents out of every R1 in tax.
According to Africa Check, however, National Treasury had an alternative method of sums, saying that revenue in the main budget comes from a number of sources, including non-tax revenue. In other words, to calculate how much tax money goes towards paying public servants in particular, it would be better to look at gross tax revenue – the total amount collected by the government.
National Treasury pointed them to the “consolidated national, provincial and social security funds” found in the statistical annexure of the February budget, pointing out that it would be a more accurate measure of determining public servant salaries.
According to the breakdown, it estimates that government will spend R576 billion on paying public servants in the 2020/21 financial year. This is 51.4% of gross tax revenue (R1.121 trillion), or 51.4 cents of every R1 paid in taxes. This is also 6.6 cents less than what Schreiber proposed.
“The extra 7 cents represents R80 billion in tax revenue that has been allocated elsewhere, the treasury said. Public servant salaries and increased debt repayments, which cost 21 cents in every rand, together take up 72.4% of South Africa’s gross tax revenue – leaving 27.6% for everything else,” said Africa Check.