Transformation

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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Latest Employment Equity Report

Posted on August 11, 2011. Filed under: Employment Equity, Transformation |

Last week, the Commission on Employment Equity (CEE) released its 11th Annual Report, which focuses on the state of workplace transformation in South Africa.

In her foreword to the report, Chairperson Mpho Nkeli comments on ‘clear signs [of progress] in reports received from employers for the 2010 reporting period‘, although she also warns that ‘generally, the representation of Coloured, women and people with disabilities still lags behind at most levels when measured against their Economically Active Population (EAP)’. Nkeli also encourages employers to continue implementing Employment Equity (EE), even during times of economic insecurity: ‘tough trading conditions and the negative effects of the recession must not deter people from putting pedal in order to drive and accelerate transformation‘.

This tone reflects something of an increased optimism from that captured in the Commission’s 10th Annual Report, which Nkeli described as discouraging because it indicates a very slow progress on transformation and potential to erode the insignificant achievement made to-date.

However, the 2011 report also confirms that transformation remains an extremely slow process: in the last reporting period, 73% of top management in South Africa was white, and 81% male. Only 1.4% were persons with disabilities.

Labour Minister Mildred Oliphant has expressed far more negative views on the results presented in the 2011 report. In a subsequent column for ANC Today, the Minister deemed the pace of changedisappointing‘, discomforting‘ and disconcerting‘. Oliphant writes,

It is thirteen years since the enactment of the Employment Equity Act; this gloomy picture is a call for drastic measures to be taken not only by the government, but in partnership with organised business, organised labour and community as a whole.

According to Oliphant, the Department of Labour and the CEE are working to amend the Employment Equity Act, with deliberations currently taking place in NEDLAC. These amendments aim to ‘close gaps’ and strengthen implementation and enforcement measures, including court referral processes, evidentiary compliance, and ‘up-scaling fines sufficiently to deter designated employers from not complying with the Act’.

more from the IJR on Employment Equity

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Focus on economic transformation

Posted on February 23, 2011. Filed under: Transformation |

Today is Budget Day, and if you are interested in how government will be spending hard-earned tax bucks, its a good idea to tune in and listen as finance minister Pravin Gordhan ‘balances the books’ at 14h00. His speech will also be broadcast live online, and the text – as well as the full budget – will be available for download from the National Treasury website from around the same time.

While macro national expenditure plans for South Africa have already been mapped out in the 2010 Medium-Term Budget Policy Statement (MTBPS), keen eyes will also be watching the extent to which Treasury’s careful bean-counting aligns with the economic development priorities set out in The New Growth Path and President Zuma’s recent State of the Nation Address.

This week, the IJR also launches the 2010 Transformation Audit: entitled Vision or Vacuum?, the Audit focuses on issues related to the quality of current economic and political governance in South Africa. (Further launch details available from Oliver Meth on 021 763 7128 or ometh@ijr.org.za)

And, for more insight into the state of economic governance and Budget 2011 from the Transformation Audit project, have a look at this editorial piece by Jan Hofmeyr, which appeared in the Cape Times and The Star this week.

Press Release for MEDIA

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