PRAVIN GORDHAN found a sneaky way to avoid raising VAT and it isn’t healthy. Promoted as a health tax, the sugar tax quickly snowballed into an all-out tax on anything sweet, including dividends.
The problem with the finance minister’s health claims, is that they don’t hold up to scientific scrutiny, for starters, South Africa is a major fruit producing nation, and in the battle between fast food, sugared drinks and cola’s, the beneficiaries have invariably been the export fruit market and consumers overseas.
Now with a whopping 11% tax on sugared drinks being extended to literally everything, including ‘intrinsic sugars’, read 100% fruit juice, the health alternative is going to be even more out of reach of the poor, as well as pensioners, who are expected to consume what?
And to live off what, five and dime spaza stores?
There is a major and significant difference between the active ingredients in all these products, financial, health or otherwise.
Fructose found in fruit breaks down in your liver and doesn’t provoke an insulin response. Glucose found in cola drinks starts to break down in the stomach and requires the release of insulin into the bloodstream to be metabolized completely. Fruit juice contains plant phenols and antioxidants, while ordinary sugar drinks do not.
Conflating the two, like the conflation of dividends and the banks who dish them out, will prove to be a costly and unhealthy error by the treasury.
For years, the sin taxes authored by treasury have targeted alcohol and alcohol drinkers, driving the beer market at the expense of more refined and hardtack liquor. Now with sugar in its sights, treasury has found a convenient scapegoat. Taken to its logical conclusion, we are likely to see a hit on fresh fruit and the proverbial fruit tree itself, which may feature alongside sweets and chocolates, and milk products, in future budgets.
Talk about taking popsicles out of the hands of children, but this is exactly what Mr Gordhan has achieved this year.
The reason why budget 2017 is hugely problematic, more so than any previous budgets, is because of two vectors:
The first, is the ANC and its ‘tax and spend‘ strategy which has resulted in a budget deficit and resulting need to service debt, the cost of which runs at an enormous R162.4 Bn. According to reports, this burden is not projected to come down any time soon, and can only get worse.
Far from austerity and prudence, the budget is rather shy when it comes to trimming spending. To give you an indication, this interest figure is almost the same amount of money the government spends on healthcare each year, projected to be R187.5 Bn.Then there is the enormous burden placed upon individual taxpayers, who must feel a bit like victims of a hit and run.
Personal income tax in South Africa is currently in an alarming disproportion to income tax generated from corporate taxation. Private taxpayers thus contribute almost 2.5 times as much as corporations, the figure grows to 3.6 times if one adds VAT and even more when one considers the fuel levy.
This trend is global, as more corporations hide behind tax havens, while ordinary citizens increasingly fork out more tax to cover the deficit.
The state will continue feeding SOEs such as ESKOM and SAA in the dirigiste economics that has become the hallmark of the ruling party. Tax on road transport has increased via the fuel levy. On a brighter note, the government intends to roll out new trains and public transport services. One can only remark on the contradiction between the national airline, and the rail agency.
NOTE: At writing this, there was no clarity from the media on whether there is a current exemption for fruit juice or not, and exactly how the new intrinsic sugar regime is being implemented. Health24 reports that fruit juice is included while The Herald reports that the deputy director-general Ismail Momoniat has told journalists that ‘Treasury proposed to introduce a threshold that would make the first 4g of sugar per 100ml beverage exempt from the sugar tax. He said 100% fruit juices and milk products would be exempt.’
PRIOR to 1994 “black persons” did not possess the vote. The majority were relegated to so-called independent homelands, most did not own land as such, and if they did, were largely dispossessed in one way or another by a labour system, which imposed a hut tax, drafted labourers onto the mines, and created a migrant population, which eroded both tribe and family, in the process shifting profit from the land, into the hands of the rand-lords and barons.
Some 87% of the land was thus owned by white persons and only 13% by black persons. There was no child-care grant to speak of, no disability grant, pensions were skewed in favour of the white folk.
Today we all possess the vote, the social wage comprising child care grant, pensions, disability and veterans grant is growing, more black people own houses and vehicles than ever before and there is unprecedented level of economic activity compared to similar periods under sanctions.
All this may one day change. Whether it is Julius Malema demanding land, or the land debate unleashed by the tipping incident, and online invective by Qwabe et al, then you may be forgiven for thinking we are still living under apartheid, and that when one arrives at white women versus the land and the dispossessed, it all comes down to real estate.
The facts behind this tragic reality are rather different.
For starters, the post-apartheid state currently owns 14% of the land in the country , only 79.2% is in private hands.
Between 57-84% of homes owned and fully paid off in the country (depending on tenure) measured over the past year, are black owned, mostly the result of mass state housing being available for purchase at low prices.* This is not to say that the relative value of black-owned property versus white-owned property is something to be sneezed at, the value here is still undoubtedly skewed in favour of the white minority.
Likewise equity, when it comes to shares, 30% of the stock on the JSE is either in black hands, or in companies controlled by BEEE, with the rest either “white-owned” or under foreign control. An uneven and unequal state of affairs that certainly deserves correcting. Despite the enormous gap and Gini coefficient marking South Africa as one of the most unequal societies in the world, the Living Standards Measure (LSM) 10 has gone from 5% black in 2004 to 29% black in 2014.
In the face of extraordinary adversity, there has been unprecedented transformation, (arguably an incomplete, unfinished transformation), — our country’s growth has however been a mixed blessing. Our population has grown from 20 million in 1960 to 52.98 million in 2013, which means we have more than doubled our population in 50 years. For every one job that would have been sufficient to provide an income and a house in 1960, three jobs must be created today.
To make matters worse, we have gone from a long boom powered by a resource market, to a resource meltdown, starting in 2009, at the same time that we are now heading into the fourth industrial revolution and a world without jobs, where increasing mechanisation and automation translates into unskilled labour becoming forever redundant.
Instead of the bipolar world which BRICS was meant to create or supplant, (the arrangement is essentially a Post-Bretton Woods solution for the 1950s), we have belatedly, and without much planning involved, entered the digital age, kicking and screaming.
South Africa has traditionally been a slow adopter of technology, we only turned on our tv screens twenty years after the West, and likewise, our broadband cable networks. The digital age, information filled and inevitable as it is, has been another mixed blessing, it has brought us all modernity, and in turn, unprecedented choices in online media, as well as the proverbial death of distance, in which there is no economic centre at all.
In the new digital world, in theory, all parts of the globe are able to compete with each other, equally. The result has been the dematerialisation of value, the rise of bitcoin, online shopping and netflix, pop-up factories, China-on-the-Desktop, the Internet of Things, all trends for which South Africans on the lower LSMs seem inadequately equipped, and for which unions, as well as employers, have failed to prepare workers.
It does not take a rocket scientist to see the massive disruptions which are occurring in nearly every economy on the globe, and more is yet to come. SA is not alone here. Uber is disrupting the taxi industry, Amazon is disrupting commerce, P2P is disrupting copyright, Bitcoin, as already mentioned, is disrupting banking.
Unless we seize these opportunities, and figure rapidly where our next economy is going to be placed, and yes, Operation Phakisa, the Oceans Economy is one such initiative, there is a danger that we will always be on the wrong side of the digital divide, and the tale-end of the economic food chain.
There is an urgent and drastic need for better internet access for the poor, food security in the form of food garden allotments, community tool-shops which replace DIY with Do-It-with-Others (DIWO), and for a raft of safety and social security measures, these I have already mentioned to some degree on Medialternatives before, they comprise an unconditional basic income grant, income equalisation, rent stabilisation and a free education grant.
Unconditional basic income grant – this is a payment once a month into your bank account, to all citizens of voting age, essentially outlawing poverty and preventing the worst excesses of the marketplace, such as the coercion of labour.
Income equalisation – in jobs that are seasonal, a central fund evens out the high and low periods, guaranteeing safety when there is no work, and creating savings when there is not.
Rent stabilisation – a form of rent control, sets maximum rates for annual rent increases and, as with rent control entitles tenants to receive required services from their landlords and to have their leases renewed.
Free education grant – a tertiary level grant to learners enabling access to higher education.
Unfortunately, ultra-leftists within the ranks of the ruling party and opposition groups as well as neo-conservatives, shun such proposals as too utopian, idealistic, or mere neoliberal tinkering. What they, the rag-tag left and conservative lobby, desire and want most of all, is to kill the private market economy which funds social security, by transplanting failed centralist and statist command economy proposals from the old Soviet Union and Cuba, a state of affairs which paradoxically also benefits the conservatives who are, at the end of the day, merely oligarchs.
Instead of social security we end up with business on welfare, endless bailouts, and junk status. It is South Africa’s dirigiste economy (the directed market), not the market economy which has failed. And it is the conservatives who have failed us most of all. One has only to look at SAA.
*Source: South Africa Survey 2016, SA Institute of Race Relations.
It took a global economic collapse for timebanking to emerge as the next wave of the alternative economy. While readers may already be familier with the concept of a local energy trading system or LETS, and South Africa already has a well-established complimentary currency in the form of the Talent, timebanking brings with it a particular form of equality — we are all timebound and the only constraints we have are therefore time-based. Exchanging one hour of your time for another person’s hour may seem absurd, but it is the basis for the time-banking system, a system which allows users to trade services.
There are over 80 timebanks in the USA and a several in the UK and Scandenavia alone. Unlike the LETS system where users still set prices of goods and services, but in a complimentary currency for example, the Talent, timebanking is done on a one-to-one basis, i.e. one hour = one currency unit.
Voluntary currencies such as the Time Dollar are therefore not competing with traditional complimentary currencies such as Australia’s Shell and Pip, and South Africa’s Talent but rather creating a third tier currency based upon volunatrism and mutual aid.
Remarkably instead of competition, allthese alternative and complimentary currencies are based upon community cooperation and have faired a lot better than mainstream fiat currencies which are based upon the failed global banking system and a corporate-capitalist military which has to occupy neighbouring countries in order to enforce the law.
If local energy trading with Talents and time-banking doesn’t grab you, there’s always COGS, a Swedish system which utilises the gift economy to “pay forward”. Instead of accepting the one-to-one exchange, users give the proceeds of the exchange to a third party as a “gift” thereby changing economic patterns which may have become too straightjacketed or outmoded by todays fast changing customs and traditions.
The KwaZulu-Natal Provincial Government has passed legislation affecting the lives and rights of shack dwellers. The shack-dweller movement, Abahlali baseMjondolo, has challenged this law and will take their case to the Constitutional Court. But after a provincial judge ruled against the movement’s first challenge, an article by the head of media services for the Department of Housing (published in the Witness newspaper on 24th February 2009) said:
“Legal representatives of the Abahlali baseMjondolo Movement, probably without proper analysis of the act, tried to portray this important legislation … as an inhumane and unconstitutional legislation designed to allow the government to embark on irresponsible evictions of homeless people. To further its purpose, the Abahlali baseMjondolo Movement has deliberately ignored our consultative and partnership approach since 1994. … Additional research would have highlighted the fact that the government, Slum Dwellers International and other associations representing homeless people have signed partnership agreements to work together since 2004. … As all provinces move to finalise their acts there is no reason to fear”.
SINCE we are still battling to get any credit for the 34000 pages we have served to the community, Medialternatives has had to syndicate via Google Syndication for gratis, in return for the prospect that t he company will allow us to join the Adsense programme. WordPress does not offer its own programme and users are expected to upgrade using WP Credits. CSSS style sheets are therefore unavaible for coding and we cannot achieve independent without the venture. More news about our RSS feed and how it affects you in our next update.
Are we not losing the plot, the meta-narrative in which a story of market folly is allowed to amplify itself via the Internet in an interconnected world, thus driving more foreclosures, as investors lose confidence in the system? How much of what we see, is the result of computer technology, virtualisation and the ephemeral? Yes the West is in crisis, and the US banking fiasco has not been averted as bad debt is offloaded onto markets around the world.
Computers have the ability to telescope the most trivial of data, until what you know, the mole-hill is a mountain, and the mountain is the biggest mountain in the world — it would seem there is no escape from decisions made in the virtual world — objects in the rear-view mirror may appear closer than they seem?
OPPOSITION to a basic income grant (BIG) falls into two categories — there are the free marketeers who preach an extreme form of market fascism in which economic losers need to be punished in order for the system to sustain itself, along with the exploitation of labour for profit, and for whom welfare is anathema (since it would mean relief from the punishment “incentive” and dilution of the motive forces behind capitalist competition), then there are the market liberals like Sean Archer (Cape Times Oct 24) who puzzle themselves with theories that merely restate the problem of poverty in terms of pseudo-scientific empiricism.
How much will poverty alleviation cost? How many poor are there in South Africa, and how can we distinguish between the poorest of the poor and the not-so-poor? Questions like these trouble the minds of liberals who have never experienced poverty, or who fear that tackling this issue will erode their status and position in society, effectively overturning the apple-cart as it were. The definition of what it means to be poor, as Archer intimates, must inevitably be rewritten by a form of redistribution that tackles the harshest of economic cruelties and depredations.