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Eskom energy hikes to push consumers into serious debt  Comments
November 5, 2009


The recent increase in electricity tariffs and future proposed hikes may push consumers into serious debt, debt counselling company Consumer Assist said on Thursday.

"The straw that breaks the camel's back for many home owners is very high utility bills that if they don't pay the lights get switched off -- and so they pay, but often to their detriment, it pushes them over the edge and they begin battling to pay all bills," Andre Snyman, chief executive, said in a statement.

Salaries were not keeping up with inflation and with close to one million people retrenched this year the capacity of people to pay had become constrained.

"Many do not seem to realise that arrears like rates and property taxes cannot be included under debt review.

"Municipalities can take action that debt counsellors cannot assist with," Snyman said.

Repayment terms could be negotiated for a loan, a car, a home or retail and credit cards.

"People also don't seem to realise that regular, fluctuating payments like Telkom, cellphones, water and lights are not considered fixed credit agreements, but living expenses.

"This means that arrears with these payments can be negotiated with creditors to be under debt review but these creditors do not need to accept this."

Snyman said the promised cut in cellphone charges -- which has failed to materialise and looked unlikely now until next year -- "could have a significant impact for business people, especially rural and small business people".

As there were not enough landlines, they used cellphones for all their business transactions.

"They desperately need some sort of relief from growing pressures and tight business conditions."

Snyman pointed out that while electricity use was widespread in South Africa only a relatively small percentage of consumers actually paid their bills and "illegal connections place a significant drain on resources".

He was also concerned about a proposed one percent tax increase on all salaries to fund the SABC and about warnings of additional income tax hikes from Finance Minister Pravin Gordhan.

"Those who pay tax and other services are a relatively small percentage of South Africans.

"They are the most skilled and form the productive cream of the nation," Snyman said.

This group carried other high costs such as those for private healthcare, education and security because of deterioration in those sectors.


"They are becoming financially overburdened and other ways of funding need to be found rather than milking the same small group."

Research by Consumer Assist had shown that those who earned R15 000 and upward and in the most skills-desirable and labour-productive phases of their lives -- from 30 to their mid-40s -- were those most seriously in debt.

Additional research by the University of South Africa found the most indebted group earned more than R700 000 a year.

"On Tuesday Sanlam chief economist Jac Laubscher told Parliament's select committee on finance that taxes were already too high and that government spending would need to be cut.

"He said the tax to GDP [gross domestic product] burden had risen considerably above government benchmarks of 25 percent to 32 percent and compared to an average of 18 percent for other middle-income countries," Snyman said.

He said this view was supported by the SA Reserve Bank's recent Financial Stability Review.

The review showed that eight of 13 indicators signalled households were in distress.

Snyman said household incomes on average had dropped 4.3 percent and there had been an 8.7 percent decline in household net wealth.

There had also been a fall of 10.1 percent in the value of household financial assets.

Household debt was 47.1 percent of GDP -- up from 46.3 percent while total new car sales were down almost a third (29 percent) with the largest drops in commercial vehicles 26 percent and heavy vehicles - 49 percent.

"Economists are warning that if you overtax the productive classes they will begin finding it too difficult to increase their businesses which mean job creation will stagnate.

"And too while poorer South Africans burn tyres in the streets to protest, better educated South Africans remain silent but go to the embassies of Australia, Canada and England and look for opportunities elsewhere in countries where tax may be as high, but schools, healthcare and safety better."

Snyman said he was concerned at the fact that he was increasingly seeing members of Parliament, corporate executives and professionals sitting in debt counsellors' offices and weeping "because they can no longer cope with their financial burdens". - Sapa
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Showing page 1 of 2 comment pages, 13 total comments
43 Weeks ago DD wrote :
Observer - Firstly I CAN substantiate because I am going through it. Secondly, read my e-mail properly - notice I said "educate yourself" - find out all the facts (don't take my word for it) around ALL of the options and do not just believe what anybody tells you. Some people cannot even afford debt councelling - then what? Just wait until they come and take everything and garnish the only thing you have left to survive! Your salary. Of course this needs to be discussed with a lawyer. Obeserver - people are in serious trouble out there - even wanting to kill themselves - there are solutions and yes this should be the last option but it is a solution none the less that very few people know of. LIKE I SAID - educate yourself about the various solutions and choose what is right for you. Read up on it. Talk to experts. But do not live in denial around your debt. That is all I am saying.....
43 Weeks ago Butterfly wrote :
What is with Eskom these days with all these exhorborant reconneciton fees and bad accounts management. They need to pay attention to the constant errors made on accounts that is costing us the consumer dearly and if we dont pay up they just show no mercy and cut you off. If we all dont pay and you cut us all off... where does your money come from then. As it is electricity is fast becomming less affordable and will result in a lot more cut offs! What then Eskom what then, another income tax percentage increase!? This country makes me sick time to move on and out.!
43 Weeks ago Anonymous wrote :
If things carry on like this, I will take my skills and qualifications and work in a country that will appreciate it more and treat their citizens with more respect and where the overall standard/quality of living is higher. This country is getting ridiculous!
43 Weeks ago Spuddy wrote :
Eskom's subsidy for solar heating is a joke - far too little too late. The "approved" suppliers load their prices. Further their is far too much wastage of power by all councils, lit up buildings etc. Worst of all, why are we supplying neighbouring countries which we the consumer end up suffering for. What a debacle!!
43 Weeks ago Observer wrote :
@ DD... you cannot just file for bankcruptcy! That too cost thousands, dont be fooled! and least yet dont give advice to the public you cannot substantiate! Debt review is a possible better option, and will force you to let go of the luxuraies like DSTV and unnecessary contracts. However I do stress that it is different for everyone as to what is unnecessary and what isnt. It might be a better option to negotiate a better deal at a lower cost on certain agreements and endevour to renegotiate at a later date and resume where you left off. If this is not possible, then it is I'm afraid time to let it go and cut your losses. It will be to your benefit in the long term. Sometimes it really really STINGS but you have to put your pride in your pocket instead of having to dig deeper into them.!!
43 Weeks ago Anonymous wrote :
There are no words to describe how poorly this situation is being handled by governmant and eskom. if this carries on, im sure the world cup that everyone is looking forward will be a disaster. No one will have extra cash to go for these games. As south Africans we need to get rid of these corrupt politicians. If President Zuma ever reads this, "please stategize money spending in government better, then we wouldn't have this problem".
43 Weeks ago Eish. wrote :
The lights are definitely not on way up at the top. President Zuma - stops protecting your cronies and privatise Escom. Then you can have a hot shower instead of a cold shower.
43 Weeks ago Sue K wrote :
Those small percentage of educated, skilled people that are being milked have already, or are running overseas. I am one of them. Who will pay the taxes then? Sa is already one of the top taxpaying countries worldwide, and the sad truth is that we dont have any services so we are paying for nothing.
43 Weeks ago Geyser wrote :
Arrest all corrupt officials, break up cartels and price collusion and take back their corrupt earnings. Impose heavy jail sentences on CEOs and managers who are involved in price collusion, and fire and punish all government officials who are corrupt. If these measures are taken, we will save billions, which will bring down inflation and the debt levels of the country and the people down. If this does not happen soon, we South Africans will see our country disintegrate into chaos.
43 Weeks ago AnonymousKZN wrote :
When will the Government realise that they are killing the goose that lays the golden egg. The money earners in this country (black and white) are not a bottomless well to be tapped every time someone fat cat wants a new car or to throw a big party. It is as if Government thinks they are royalty and we are its subjects to be milked in ruin.
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