Wednesday, February 21, 2007

South Africa's First Budget Surplus

South Africa Has First Budget Surplus - Source: BBC.com

Trevor Manuel, South Africa's finance minister, has announced the country's first budget surplus and has also announced that funding will be increased in certain key areas.

The budget surplus is the result of high tax revenues. The high tax revenue is the consequence of a clamp down on tax avoidance, high commodity prices, a wider tax base and a general increase in prosperity. Even with $2.4 billion of the budget going to the 2010 World Cup soccer tournament, this increase in tax revenue has lad to a surplus of $1.5 billion.

The surplus will help with the planned increases in funding for education, health care, housing and sanitation. In addition, there are plans for a social security system, which will provide unemployment insurance, disability and death benefits, as well as benefits for the elderly.

Question:

With the great amount of poverty that exists in South Africa is the government justified in spending $2.4 billion on the World Cup?

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