SA's fiscal policies help poor

SOUTH Africa's fiscal policies lifted 3.6 million people out of poverty in 2010-11‚ a World Bank report has found.

The SA Economic Update‚ released yesterday, found that the country's fiscal policies were cutting the rates of poverty and inequality‚ and that tax and social benefits were effectively redistributing income from rich to poor.

"We find that fiscal policy is very progressive in South Africa – it benefits the poor more than the rich‚" World Bank economist Catriona Purfield said in Pretoria.

"We find that because of fiscal policy‚ large reductions are made in poverty and inequality – in fact they are the largest reductions due to fiscal policies in our sample of 12 countries."

The other 11 middle-income sample countries were Armenia‚ Bolivia‚ Brazil‚ Costa Rica‚ El Salvador‚ Ethiopia‚ Guatemala‚ Indonesia‚ Mexico‚ Peru and Uruguay.

Purfield said the report showed South Africa's tax system was slightly progressive‚ in that the rich paid a higher share than the poor in income tax and VAT.

However‚ inequality was still higher than the other 11 countries in the sample.

Meanwhile, South Africa's tax revenues jumped by 10.6% in the 2013-14 fiscal year, helped by more people paying income tax due in part to tax changes, data showed.

Revenue from VAT rose by a slower 8.7%, curbed by the effects of a sluggish economy.

Tax revenues as a whole totalled R900-billion for the year ending March this year. – BDlive, Reuters