EDITORIAL: ‘Wealth tax’ shows cupboard is bare in ‘unstoppable’ ANC

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Say what you like about ANC president Cyril Ramaphosa, he can’t be faulted for his description of the ANC as “unstoppable”.

Not in a good way, obviously — but the party’s evident commitment to unworkable dullard ideas, and its amnesiac willingness to trot out hackneyed solutions, are indeed relentless.

The “wealth tax”, the “basic income grant”, “chemical castration” of rapists, and the “state bank” are ideas that illustrate how the ANC can diagnose problems correctly, then prescribe the wrong medicine. If it were a doctor, it would be scrubbing up for brain surgery at the slightest hint of a throbbing appendix.

These are lazy solutions, cheap slogans as quick fixes for deeper problems. It allows the ANC to sidestep engaging with the real structural faults in our society.

Unable to imagine how to deal with the societal problems that have caused a rape epidemic, rather bleat about “chemical castration”. As if the notional threat of jail or other punishment has cowed the legions of criminals stalking the country.

Or take the wealth tax. At the ANC’s policy conference, the party said: “A wealth tax can be a mechanism through which revenues can be raised to fund a basic income grant [BIG].”

It’s a great solution if you’re trying to out-crazy the EFF’s economic plans, but it’s fraught with unintended consequences for a country desperate for investment.

As it stands, only five countries have some form of wealth tax: Colombia, France, Norway, Spain and Switzerland, while eight others have abandoned such a tax since 1990.

An OECD report in 2018 says wealth taxes are “distortive” and generally raise less money than policymakers expect. Such a tax “may affect entrepreneurship and business creation”, which would also reduce jobs — not something SA has in abundance.

As Dennis Davis, who chaired the tax committee advising the government, explained three years ago: “The problem with a wealth tax in SA is that it would be levied on an incredibly narrow base.

As it is, just 6.8-million of SA’s 60-million people pay a third of all tax revenue. And because so few people are “super-rich”, a wealth tax would have to be set ridiculously high to finance a BIG. 

And it would be a nightmare to administer, because there is no existing database of people’s wealth, only income.

SA’s business organisations have said the only way to finance a BIG is by raising VAT to 17% — but the ANC’s economic policy head, Mmamoloko Kubayi, has flatly ruled this out. 

It should concern us, however, that this proposal, as well as the pointless quest to “nationalise the Reserve Bank”, have been raised repeatedly at ANC policy conferences for years.

It is, in this case, fortuitous that you can rely on nothing ever happening. You sense even the performative politicians secretly know these ideas are a bust.

But the flip side of that coin is that you can expect that none of the other proposals will happen either. The pledge to finally deal with service delivery, to create jobs, to stamp out corruption — the party gets an “F” on implementing every one.

In this respect, the ANC is indeed “unstoppable”. 

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