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‘Black Tax’ an invisible obstacle to equality

03 March 2015   (0 Comments)
Posted by: Author: Zama Ndlovu
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Author: Zama Ndlovu (National Planning Commission)

What is the appropriate "division of labour" between the public and the private sector in addressing SA’s structural weaknesses? The World Bank November 2014 report, Fiscal Policy and Redistribution in an Unequal Society, finds that despite SA’s "effective" use of fiscal policy to reduce poverty and income inequality, higher growth and employment are required to reduce poverty and inequality.

The report demonstrates how taxes and government spending have allowed SA to significantly reduce poverty and inequality compared with 11 other countries. It finds that, through social spending consisting of cash transfers and free basic services, fiscal policy lifted about 3.6-million people in SA out of poverty, significantly reduced inequality from a Gini coefficient of 0.771 (before redistribution) to 0.596 (with cash and social spending). But, despite the major reduction in the Gini, the initial gap between the rich and poor is so high that SA still ends up with higher inequality than the highest starting point of any country in the sample.

But there are a few limitations with the methodology. For example, by focusing on household data, the study does not take into account corporate earnings. In addition, respondents in household surveys tend to underreport on earnings from assets such as dividend earnings. Moreover, the quality of the service received from the government was not factored into the research. While acknowledging the importance of better quality service delivery, especially in education, in addressing long-term unemployment, it becomes painfully obvious that addressing the extremely skewed distribution of income, which had led to the "two richest South Africans (having) the same wealth as the bottom half of the population", according to Oxfam, is the only real way into a more equitable society. But whose role is this? Must the government work on more policies or should the private sector play a bigger role in resolving issues of distribution?

In a discussion on the draft National Youth Policy at Constitution Hill this past weekend, participants identified "Black Tax" as a major problem facing young South Africans. Black Tax is a colloquial reference to a range of experiences where disadvantaged groups, especially young black people, find themselves having to clear "invisible" hurdles to get access to certain opportunities such as jobs, promotions, information and quality education. It is an everyday reference to the experience of structural discrimination that remains embedded in our society.

One instance of Black Tax at work is how internships, meant to provide young people with the experience they need to increase their chances of permanent employment, end up entrenching systematic discrimination. How? Young people who access higher education with financial assistance from universities and the state struggle to accept internships that pay little or no money. Thanks to apartheid spatial planning, internship stipends are spent travelling to and from work. They cannot carry the additional cost of work clothing, food and other expenses. The bulk of young people do not come from homes where parents easily supplement their income until they secure better paying jobs. Countless young people end up dropping out of programmes, not due to entitlement, as many employers tell us, but because they simply cannot stay in an internship.

Structural inefficiencies are not simply issues of the bottom line. They have a real effect on the quality of life South Africans enjoy, and effectiveness of the solutions. Someone must carry the burden of the inefficiencies intrinsic in a society plagued by the unrelenting effects of centuries of systematic oppression. Will it be a government under spending pressure, or will it be a private sector under growth pressure, and how?

This article first appeared on bdlive.co.za.


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