Dear Honourable Minister Nene,

I write to you as a citizen concerned for the well-being of South Africa. Our budget deficits are taking a toll on our people with taxation increases that have a particularly negative influence on the poor. This has manifested through the 15 percent VAT of late. I will not labour the point of the crisis that we face as a nation, but would like to suggest a win-win scenario for government and citizens:


Tax-free government bonds. Why should South African citizens have to pay tax on earnings they make from government bonds? The government is essentially taking a portion of the interest earned on bonds, removing potential for useful growth that beats inflation and resulting in an unattractive investment option for the majority of savers and investors. My suggestion would be to allow for tax free bonds of principle values under R5m which would encourage a lot more people to use the bonds as an income-earning and savings vehicle. Private banks can be the providers of a platform for easy access to the government bonds through specific accounts that mimic fixed deposit accounts.

The intended benefit would be increased inflow of funds through the purchasing of bonds by the public as there is now an incentive to use them as savings vehicles due to the tax-free initiative. The government will benefit from additional capital with which to use for the budget as further bonds are bought by local investors, eliminating the need to tax them on any interest earned as this is the major deterrent of government bonds.

I hope this can be considered.

Thank you