The purpose of this essay is to identify the pros and cons of the factors leading to economic growth, address governments policies towards small businesses, highlight tax reforms that need more time to be judged whether or not they will succeed and to decide whether or not government will achieve a 6% growth rate by 2010. The issues addressed are particular poignant given the fact that there has been a lot of media coverage over the new budget due to a number of significant changes in the tax structure. Governments new tax reforms were analysed along with its initiatives in achieving economic growth. It was found that if Governments proposals are followed through affectively and efficiently they should reach a growth rate of 6% or more by 2010.
The measure of a countries economic growth has somewhat changed over time, from its early years under Mercantilism where a countries economic growth was believed to be in its measure of increased specie, to present day times with the sources of economic growth conventionally defined to include savings, investment in the form of both physical and human capital formation, technological inventions and innovations, and increases in the availability of labour of different skills (Wikipedia, 2006). The countries policy towards these factors is positive to say the least, coupled with new tax reforms that both decrease the burden to middle to low income earners and theoretically widen the tax base South Africa has a strong chance of achieving a growth rate of 6% or higher.
The factors leading to economic growth
With economic growth comes a number of positive affects, generally it raises the standard of living for its citizens, lowers unemployment as an increase in the aggregate demand effectively means there is an increased demand for a countries resources hence an increase in demand for labour, tax revenue will also increase thus allowing Government to finance more projects and as...