Perfect Opportunity for SA to Announce Implementation of Wealth Tax

GOOD Statement by Brett Herron, Unite for Change Leadership Council Member and GOOD Secretary-General:

While US President Donald Trump clearly doesn’t, most dollar millionaires in most G20 nations, including in South Africa and the US, back the principle of a special tax on their wealth as a lever to address unsustainable inequality.

A recent study by the organisations Patriotic Millionaires and Oxfam SA showed that most South African dollar millionaires would support a 2% annual tax on their wealth to better fund social protection, education, and the energy transition. This finding was consistent with that of a study conducted last year for Earth4All and the Global Commons Alliance, which showed that more than two-thirds of dollar millionaires across 17 G20 nations supported the principle of a wealth tax.

Last year, Brazil used its leadership of the G20 to champion redistributive taxation. Proposals for a minimum global income tax were blocked – by the US and Germany, among others – but G20 finance ministers agreed to “engage cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed”.

South Africa has sought to use its leadership of the G20 this year to build on Brazil’s momentum in addressing inequality. Next week would be the perfect opportunity for the President to put South Africa’s money where its mouth is and announce the implementation of a more progressive tax regime.

According to the World Bank, the Top Five most unequal countries in the world are South Africa, Namibia, Botswana, Eswatini, and Colombia, followed by Brazil, Zambia, and Angola. (The least unequal countries on the list are Slovakia, Slovenia, and Belarus).

The imbalances didn’t drop from the sky; they were deliberately engineered. Balancing them must be similarly deliberately engineered.

It is said that “a fool and his money are easily parted”. The dollar millionaires who are willing to pay more taxes are not fools, and nor are they necessarily particularly altruistic or charitable. They are sensible and pragmatic. They know it’s foolish to think that the level of inequality in the world is sustainable. They know that political and economic stability are closely linked to the security of their wealth. And it gives them comfort to know that their wealth grows much faster than 2% per annum – even if just left in the bank; paying a bit more won’t affect their lifestyle.

In South Africa, elements of redemption and justice also come into play. Imposing a wealth tax on the super-rich would create opportunities for those who acquired enormous wealth under apartheid – and their exclusive group of post-apartheid beneficiaries – to give something back.

This is not an unimportant consideration. It was first raised by the late Archbishop Desmond Tutu, and a 2% wealth tax on the assets of listed companies was included in the recommendations of the Truth and Reconciliation Commission he chaired. It was a mechanism to enable South Africans who felt awkward about their relative privilege in a profoundly unequal country recently emerged from apartheid to express their humanity.

Sadly, the government largely ignored the TRC recommendations, and it failed to grasp the importance of the moment of goodwill that reigned in the early 2000s, in the immediate aftermath of the Mandela presidency, and an era of robust economic growth.

According to the Tax Justice Network, which has a secretariat in the UK and a team spread across 15 countries, South Africa could raise about R170 billion in tax revenues by implementing a tax on net wealth with rates like the Spanish solidarity surcharge, which applies to the richest 0.5% of its households.

To put R170 billion into perspective, it’s half the cost of the country’s entire basic education budget. Rather than sitting unnecessarily in the portfolios of the super-wealthy, this money, together with the even bigger pile waiting to be freed by eliminating waste from the national budget and corruption, must be put to work developing a balanced, fairer, and more sustainable nation.

The science is clear: South Africa is the most unequal society on earth. Inequality creates instability, and most of the country’s super-rich see the need to contribute to halting the slide.

Why, then, is the South African State following the George W Bush example of ignoring climate science and stonewalling efforts by energy corporations to cap emissions? Like our upper class, these corporations understood science. They believed it was incumbent on the State to intervene in the business model that put profit over the planet.

The present incumbent of the White House has breathed fresh life into South Africa’s racist fringe, which is hard selling the idea that post-apartheid transformation is a cover for corruption and equates to White victimisation.

South Africa cannot be deterred by racists. The country’s greatest feat, for which it was lauded around the world, was confronting and overcoming racism. Reconstructing a nation of justice and equality, at peace with itself, lies at the very heart of the Constitution. The greatest sin of the democratic regime has been its grotesquely lacklustre record in effecting redress. Its tardiness doesn’t make the need go away.

The GOOD Party has consistently advocated for extra taxation of the ultra-wealthy because it makes sense. South Africa is not a poor country; the resources exist to turn inequity into inclusivity, but the resources must be fairly and professionally tapped – and not stolen.

If South Africa fails to address colour-coded inequality, poverty, and indignity, it will open the door to populists who claim the Constitution is the problem that got in the way of redistributive justice, and we will open the door to more social instability.

South Africa is a member of the G20, not because of its wealth, but because of what it symbolises as a force for justice. Without pushing forward for justice, this power will diminish. Now, surely, is the time.

GOOD Youth Focus: The party places a strong emphasis on youth empowerment and engagement.

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