PRETORIA, November 4, 2014 – More than 3.5 million South Africans are lifted out of poverty through fiscal policy, which taxes the richer in society and redirects resources to raise the income of the poor through social spending programs, according to a recently released World Bank Group (WBG) report.
The South Africa Economic Update: Focus on Fiscal Policy and Redistribution in an Unequal Society report explores whether fiscal policy reduces poverty and inequality. It offers an analysis which is based upon the innovative use of fiscal and household survey data to provide evidence on two main questions; how do taxes and spending in South Africa redistribute income between the rich and the poor, and what is the impact of taxes and spending on poverty and inequality? Against the backdrop of a high fiscal deficit and rising debt burden, it is essential that the government uses its existing resources effectively in the fight against poverty and inequality, according to the report.
Asad Alam, WBG country director for South Africa, said this report goes to the heart of the country’s most pressing challenges and speaks to how policies are working to support the National Development Plan’s (NDP) ambitious targets of eliminating extreme poverty and reducing inequality.