Our Income

As individuals we receive incomes from various sources, but mainly from our employment earnings. Based on our incomes, we are able to afford certain goods and services. Our income levels should therefore serve as our guide when deciding on our expenditure levels.

Government derives most of its revenue from taxes paid by the citizens of the country. These taxes are paid on income you earn, on profits generated by companies and on goods brought into the country. This revenue is then used to provide goods and services for the citizenry; such as health, education and other social services. It follows therefore that there is a direct link between the individual’s income and the income of the Government. Should citizens be unwilling or unable to pay taxes, this would negatively impact government’s ability to provide key essential services.

Living Within Our Income Levels
Whether you are a government worker, private sector employee, or your own boss, you have to watch your spending. You try to ensure that you make enough to cover your bills. At the end of the day if this income is more than your expenses, you are left with some monies (savings) that can be deposited in the bank or invested in other financial assets such as government treasury bills or shares in companies. If, however, your expenses are more than your income, then you may have to withdraw money from your bank account or borrow from a family member o friend. If your expenses continue to exceed your income, the time will come when you will be caught up in a terrible debt situation, where every month you are unable to pay all the bills. For example, you may find that you are unable to pay the hire purchase people, and they repossess your lovely sofa or stove.

Now, imagine the government as a bigger household that manages the income and expenses of the entire country. When revenue exceeds expenditure there are savings, also referred to as a fiscal surplus; however if expenditure is more than revenue, we say government has a fiscal deficit.

If the government incurs a deficit it will have to borrow from local or foreign banks or increase taxes to pay for the extra spending. The other option for government is to spend less; this can be done by reducing the number of persons it employs or the salaries it pays to them, or by reducing the amount it spends on purchasing materials and services.

If the deficit continues, it means that at come point government may not be able to meet pension payments, repay its debt or pay salaries on time; it may also mean that roads cannot be maintained and subsequently become filled with potholes, schools may not receive new supplies of books or desks, and hospitals may have to go without certain drugs. In any circumstances, we the citizens will suffer. With late salaries, we will not be able to pay our own loans to the banks, our vehicles fall apart on the bad roads and the hospitals will not be able to help us when we become sick.
If this situation persists, we say that the government’s fiscal operations are unsustainable. The state can no longer live beyond its limits, spending more than it collects. Some “belt-tightening” has to take place! National efforts must be made to stabilise the economy in order to prevent further contraction.

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