GOOD Statement by Brett Herron ,
GOOD Secretary-General
18 February 2025
South Africa’s economy is at a crossroads: There’s a shortage of revenue, little room to increase already steep income and company tax without pushing the middle class over the edge, and a crisis of poverty that if left unaddressed threatens the sustainability of the constitutional democracy.
Increasing the national debt is not an affordable option – it is a drain – and increasing VAT will increase the burden on poor people. As things stand, around 18 million South Africans of working age are poor enough to qualify for the R370 a month SRD grant, which is less than half the money needed to buy sufficient food to sustain themselves.
The only circumstances in which a VAT increase should be considered is if the increase is ring-fenced to implement a Basic Income Grant of sufficient quantity that all can afford to eat.
The fact that, 31 years into democracy, South Africa is among the most unequal societies in the world, and that the inequality remains largely colour-coded, as engineered by colonialism and apartheid, places the country in a particularly vulnerable position. The unemployment rate among the Black African (35,8%) population group remains higher than the national average (31,9%) and other population groups. With Black African women being the most vulnerable with an unemployment rate of 38,0%.
The most viable remedy is to revisit the recommendations of the Truth and Reconciliation Commission, contained in its Final Report, on the implementation of a wealth tax.
The TRC recommended various measures to address inequality including a surcharge on golden handshakes paid out to senior bureaucrats after 1990, a retrospective surcharge on corporate profits, and a special one percent tax on all assets listed on the JSE. It said that voluntary contributions by business for the compensation of apartheid victims had raised “a paltry amount when one considers the massive amount needed to repair the inequities and damage caused to entire communities”.
Speaking at Stellenbosch University in 2012, the former Chairperson of the TRC Archbishop Desmond Tutu said apartheid had left South Africa riddled with self-hate which manifested, among other things, in the crime rate and death rate on the roads.
Addressing a predominantly White audience, he noted that they had all benefitted from apartheid – though not all had supported it – and hoped that White citizens would themselves agitate to contribute to healing the nation. (He also called on members of then-President Jacob Zuma’s cabinet to sell their expensive cars “to show you care” about the poor in South Africa.)
Much has changed in South Africa in the years since Tutu handed over the commission’s recommendations to President Nelson Mandela. Then, arguably, White South Africans were more in the mood for the notion of an inclusive Rainbow Nation of infinite promise for all. White South Africans were prepared for major change/transformation which was expected in our first democratic term. But not much changed and as 30 years passed the privileged lifestyle has hardly been touched.
In addition, more than 15 years of slow-to-no economic growth has taken its toll on many members of the middle-class, who equate the high rate of tax they already pay to contributing to redress.
Nonetheless, there are many members of this class who understand that the extent of inequality – and suffering of the poor –is fundamentally unsustainable, and would support measures to fix it provided they were well thought out and the money wouldn’t disappear down a hole. They understand the advantages, including economic advantages, a less unequal and less volatile society would offer.
Instead of being regarded as a punishment, a once-off wealth tax would better be viewed as an investment in the post-apartheid non-racial society by those who benefitted most from the system – and an opportunity, long delayed, to cross the Rubicon of redress.
It is time South Africa has this conversation directly though it will meet even fiercer headwinds than the Expropriation Act, BELA, NHI et al have encountered.
What form the wealth tax takes, we leave to the Minister of Finance’s budget speech tomorrow.
Media enquiries:
Brett Herron, GOOD: Secretary General
Cell: 0825183264
Email: bretth@forgood.org.za
Samantha Jackson, GOOD: Media Manager
Cell: 083 5509875
Email: samantha@forgood.org.za