Director’s Cut: The wisdom of Dawie Roodt

South Africa’s fiscal alarm bells are ringing again. With debt soaring, growth stalling, and the Minister of Finance running out of tax options, economist Dawie Roodt lays out the hard truth: “You can’t tax a broken economy back to life.” In this frank conversation with Alec Hogg, Roodt explains why VAT hikes are political suicide, how inflation quietly steals from citizens, and why he believes only bold reform - or a new government - can stop the looming financial cliff..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..Watch here.Listen here.BizNews Reporter.When the Medium-Term Budget Policy Statement arrives next week, South Africans will again hold their breath. Will the Minister of Finance raise taxes, borrow more, or finally admit that the state has spent itself into a corner?Economist Dawie Roodt believes the answer is both obvious and painful. “You can’t tax a broken economy back to life,” he tells Alec Hogg. “But that’s exactly what our politicians keep trying to do.”Roodt has been watching South Africa’s tax system unravel for years. He remembers when VAT came in at 4 percent in 1978 and politicians swore it would never go higher. Today it sits at 15 percent, and behind closed doors officials are again debating whether to lift it to 16 or even 17. “There’s nothing as permanent as a temporary tax,” he says. “VAT is the last tap left that can still bring in serious money.”According to him, the other taxes have hit their ceiling. “Company tax at 27 percent is too high. Personal income tax is exhausted. Only a handful of South Africans pay almost all the income tax, and we’re well past the Laffer Curve. Raise rates further and you collect less because people work less, hide income, or leave.”Roodt isn’t just worried about the numbers. He’s worried about honesty. When Parliament tried to raise VAT earlier this year, the same parties that voted for it later bragged about blocking it. “That tells you the quality of political leadership we have,” he says. “They all promise to spend more on everything but never say who’s going to pay.”Behind the theatre lies a darker reality: the state’s finances are falling apart. Debt keeps rising faster than the economy, and interest payments have overtaken social spending as the second-largest budget item after education. “This is not government debt,” Roodt insists. “It’s state debt. It’s yours and mine. When politicians leave office, the debt stays behind.”He compares it to a household maxing out its credit card while refusing to cut expenses. “If the economy was growing fast enough, we could carry the debt, but it’s not. So the ratio just gets worse every year. We are heading for a fiscal crisis if nothing changes.”The easy fix for politicians is to tax more, not spend less. But that, he says, is economic suicide. “Every rand they take from the private sector and hand to the state becomes worth less. You and I spend that money efficiently. The government spends it wastefully.”Despite that, SARS has been told to collect more aggressively. The tax authority received an extra R8 billion in funding and, by Roodt’s account, is “one of the few institutions still working properly.” Yet that efficiency has a cost. “They’re squeezing a weak economy even harder. You can’t keep pulling milk from a cow that’s stopped eating.”When asked about the idea of a tax revolt, he shakes his head. “That’s not the way. Millions of people depend on the state to survive. But the system has become unfair. The productive side of the economy is being drained to feed the unproductive side.”Inflation, he warns, is the hidden tax that finishes the job. Politicians prefer it because it solves their debt problem quietly. “After the Second World War, Britain paid off 60 percent of its debt through inflation. It’s a bad thing because it destroys savings, but it’s popular among politicians because it also destroys debt.”South Africa, he says, risks falling into the same trap. “The minister won’t lower the inflation target to three percent because it would expose Eskom and the municipalities that keep raising prices above inflation. Inflation lets them get away with it.”Asked what the solution is, Roodt’s answer is blunt. “Spend less. Make the tax system simpler and cheaper. Scrap the zero-rated VAT items that invite corruption. If you want to help the poor, do it directly through grants, not through loopholes that everyone exploits.”But he also believes real change starts with the basics. “Fix the police. Clean the streets. Enforce the traffic laws. Those three things would make South Africans proud again and send a message to investors that we’re serious about order.”He laughs when asked about the endless “ten-point growth plans” that emerge from government. “They’re written overnight when someone panics. They hold a meeting, draft a plan, everyone claps, and nothing happens. Forget the plans. Just start doing something right.”Despite his criticism, Roodt is not pessimistic. He’s seeing what he calls a “quiet awakening.” South Africans, he says, are finally asking the right questions about where their taxes go. “The budget is at the heart of democracy. When a politician says they’ll spend more on A B and C, ask them where the money’s coming from. Ask if it’s fair. Ask if it’s efficient.”Voting patterns, he believes, are shifting from ideology to bread-and-butter issues. “We used to vote along race or history. Now people are voting for survival. That’s maturity. People realise that growing the economy helps everyone.”Still, he doesn’t believe the ANC can reform itself. “The problem is the ANC. Their ideology is wrong. We must get rid of them or nothing will change. What we’ve done for the last twenty years hasn’t worked.”If change doesn’t come from politics, he says, it can come from individuals. “The economy now lives in the cloud. You don’t need permission from a politician to participate. Get skills, get a good connection, and join the modern economy. Build a state-proof business. Ignore government as much as possible.”He lists the bright spots that still give him hope: agriculture, private education, finance, technology. “There are many opportunities. The Reserve Bank is doing a great job keeping inflation low. Interest rates will eventually reward savers. The service industry is booming. Specialists, programmers, pilots, doctors — those skills are in demand.”After an hour of economic realism, Roodt ends on an unexpected note of optimism. “Look at history,” he says. “We’ve never had it so good. Yes, it’s not a straight line, but the trend is up. Artificial intelligence will bring abundance. Skills will be rewarded. TVs, food, and cars keep getting cheaper. The world is improving, even if our politicians aren’t.”He smiles, half weary, half hopeful. “We’ll be fine if we stop waiting for the government to fix things. The future is in our own hands.”

Director’s Cut: The wisdom of Dawie Roodt

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