Economy

New Wealth Tax?

Posted on August 19, 2011. Filed under: Economy, Reparations, Transformation |

Kate Lefko-Everett

Over the last week or so, IJR Patron and Archbishop Emeritus Desmond Tutu has provoked a national conversation on the prospect of a ‘wealth tax’ imposed on affluent white South Africans, which he suggests would advance ubuntu and reconciliation while contributing to ‘the national effort to uplift the poor’. (more…) In an article in the Cape Times this morning, he traces this proposal to the 1998 recommendations of the Truth and Reconciliation Commission (TRC) in which ‘the idea of a tax for whites, as a form of reparation, [was] raised’.

Interestingly, this recommendation has come at a time when the global economy has suffered a further round of serious instability, South African labour strikes for wage increases have again become acrimonious, and American billionaire Warren Buffett has called on the US government to ‘stop coddling the super-rich‘ and ‘get serious about shared sacrifice’.

Tutu’s recommendation has been met with both firm support and staunch opposition. The FW de Klerk Foundation, for example, has described it as contradictory to the constitutional principle of non-racialism, and raises the following questions:

‘Would whites who opposed apartheid be expected to pay the same as those who supported it? Would there be different tax scales for whites who supported the ANC, the DP and the old National Party? And what about the many blacks who held well-paid positions in homeland governments?’

The Freedom Front + has called the proposal ‘racist and thoughtless‘.

However, proponents have also emerged including law professor Pierre de Vos, who has challenged the constitutional argument put forth by the FW de Klerk Foundation. Further, de Vos has described Tutu’s proposal as

‘…an important and welcome idea that must be supported by all right-thinking South Africans with even a smidgen of a conscience or common sense… Why not impose such a tax of — say — 2% or 3% of one’s annual income for a period of a year or two and then divert that tax into a special fund, administered by a respected panel of experts with the brief of funding and administering projects that would begin to address the shockingly bad facilities at many government schools frequented by the poorest of our citizens — a state of affairs indisputably caused by apartheid.’ (full article)

Issues of apartheid reparations, redress, economic transformation and poverty eradication all lie at the heart of this conversation.

Irrespective of your position on Tutu’s proposed wealth tax, few among us can disagree with his assessment that South Africa continues to be ‘a society of fantastic wines and restaurants and expensive tastes in automobiles, wrist watches and real estate‘ for some, while millions of others continue to live in poverty. The South African Child Gauge 2010/2011 reports that as of 2009, 60.5% of South African children (about 11,252,000) lived in poverty, in households with a monthly per capita income of less than R552.

Meanwhile, according to Statistics South Africa’s 2005/06 Income and Expenditure Survey, at that time the most affluent 10% of the population had a shared income of R381 billion, compared to R1.1 billion among the least affluent.

Following the conclusion of the TRC, a President’s Fund was established under the Promotion of National Unity and Reconciliation Act (Act No 34 of 1995), which is intended to provide support for survivors of apartheid gross human rights violations and for community rehabilitation. This Fund had accumulated close to one billion rand by March 2010. (President’s Fund Annual Report)

While the reparations through the President’s Fund are important and should be considered carefully, is it worth thinking about how much more could be achieved with an additional 1% tax on the income of our wealthiest 10%?

What are your views on Tutu’s proposed wealth tax, prospects for reparations, and creative solutions to economic transformation and poverty eradication?

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IJR welcomes a well-balanced budget

Posted on February 24, 2011. Filed under: Economy |

The Institute for Justice and Reconciliation (IJR) commends Finance Minister, Pravin Gordhan, for delivering a balanced budget speech that, against the background of continuing global volatility, should instill much-needed confidence in the economy.

While acknowledging the present global challenges, and how their variability may have an impact on the domestic economy, Gordan indicated that government will forge ahead with its developmental and growth initiatives, without deviating from the principles of prudent countercyclical planning, and with the assurance that it will not incur undue expenditure that coming generations will have to pay for. As such, he has opted for forward-looking consistency, sticking to existing priorities that are meant to change the face of South African society.

“This forward-looking approach has been evident in his emphasis on job creation, particularly so on the creation of employment opportunities for the youth. He repeatedly emphasized the need to create future perspectives for the SA youth,” said Jan Hofmeyr, head of Political Analysis Unit at IJR.

In addition to the R9bn jobs fund and the R20bn in tax incentives to business that President Zuma announced during the State of the Nation, Gordhan also announced that R6bn will be awarded to the National Student Finance Aid Scheme, which will allow more learners from underprivileged background to enter the tertiary education sector.

In line with the New Growth Path document that was released last year, he also committed government to the four priority areas of public infrastructure investment, supporting labour absorbing industries, promoting the green economy, and supporting rural development. In the light of the threat that bad governance practices may have had for the impact of such investment, his commitment to a much harsher approach to fraud and maladministration should be welcomed. In what should be seen as the specific targeting of what has become known as tenderpreneurship, his announcement of the tightening of procurement procedures should be applauded.

Areas that are of concern, which he also highlighted in his speech, has been rising expenditure on the servicing of debt and a doubling of the public service salary bill over the past five years. Although our debt costs remain fairly modest against that of most of our peers, this has been the one item that has shown the most significant growth. Hofmeyr said, given the significant, and unsustainable, rise of public sector salaries over the period mentioned, much bargaining will be needed between the state and public service unions in order to ensure that government employees are being compensated at competitive rates, without jeopardizing the prospects for increased development expenditure.

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IJR Conference: Economic Transformation Beyond 2010

Posted on July 13, 2010. Filed under: Economy, Events |

Economic Transformation Beyond 2010: Short-term Remedies and Long-term Strategies

The Institute for Justice and Reconciliation, in partnership with The Sunday Independent, will be hosting  a 1-day conference where leading policy-makers and thinkers will engage each other on South Africa’s developmental targets in an increasingly unpredictable global environment.

Date: 28 July 2010
Venue: The Sheraton, Tshwane
Time: 09.00 – 16.45 (Registration from 08.30)

Limited places available. Please RSVP to Ms. Lameez Klein at 021 763 7137 or lklein-at- ijr.org.za by the 19th of July 2010. The Sunday Independent extends a special subscription offer to participants to this conference!

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South Africa: “rainbow miracle” or “mired in decay”?

Posted on June 8, 2010. Filed under: Economy, News, Race Relations |

KATE LEFKO-EVERETT

Several months ago, journalist Diana Geddes of The Economist visited the IJR and interviewed several members of staff, including Executive Director Fanie du Toit. These interviews, together with publications including the 2009 SA Reconciliation Barometer Report and the 2009 Transformation Audit, constituted sources for a “Special Report on South Africa” that appeared in the print edition of The Economist on 3 June.

After reading and reflecting on the Special Report, I think it is always important to be honest about the challenges South Africa continues to face after 16 years of democracy.  I also feel, however, that these past 16 years have been full of South African success stories, which seem to feature in national and international headlines far less often.

Some of the  fundamental questions posed by Geddes in the Special Report are captured in the following opening paragraph:

Can the “miracle” nation, which won plaudits around the world for its peaceful transition to democracy after centuries of white-supremacist rule, conquer the bitter divisions of its past to turn itself into the “rainbow nation” of Nelson Mandela’s dreams? Or will it become ever more mired in bad governance, racial tension, poverty, corruption, violence and decay to turn into yet another African failed state? With Zimbabwe, its neighbour to the north, an ever-present reminder of what can happen after just a couple of decades of post-liberation single-party rule, many South Africans, black and white, worry that their country may be reaching a tipping point. (Full article here)

I am left wondering if this really captures the nuances and complexities of the South Africa of our daily lived experiences – one which to me still often can feel both inspiring and disappointing, deliberative and impulsive, contradictory, exciting and full of possibility, all in the space of an ordinary Monday morning.

To read the articles featured in the Special Report, follow the links provided below. Also, an audio interview with Geddes is available here. And please, let me know what you think by leaving a comment below!

The price of freedom
The monolithic ANC
Colour me South African
Jobless growth
A new kind of inequality
Corruption in South Africa
South Africa’s great scourges
Last in class
Don’t get ill
Still everything to play for
Sources and acknowledgments

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Transformation Audit generates public debate

Posted on February 22, 2010. Filed under: Economy, Events |

Jan Hofmeyr, Editor of the Transformation Audit

The launch of the IJR’s annual Transformation Audit has provoked substantial public debate among South Africans, particularly in response to University of Johannesburg Professor Sakhela Buhlungu‘s article on Political influence withouth organisational power: COSATU’s contested future.

Click on the links below to follow  media coverage of the Transformation Audit launch:

Tough times in transformation: Institute – Michael Hamlyn, I-Net

Recovery will take a while – Regan Thaw, Eyewitness News

Warning on World Cup euphoriaSAPA, Weekend Post

Steel industry crucial to renewable energy efforts Peter Delonno with Ingi Salgado, Samantha Enslin-Payne and Donwald Pressly, Business Report

To read more about Professor Buhlungu’s article, follow the links below:

Buhlungu: Cosatu must learn hard lessons – SAPA, Times Live

Unions neglect shop floor for political sway- academicLinda Ensor, Business Day

Cosatu: we’re just fine – SAPA, iafrica.com

To obtain a copy of the 2009 Transformation Audi, please contact the IJR on (+27) 21 763 7128 or leave a comment below.

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