SA Trade Unions Demand New Tax New Policy Outlook

September 15, 2010 Taxation in South Africa

Flag this photoAccording to South African trade unions the national Government needs to set a new economic growth path based on several new taxes and a more active and aggressive role in the economy.

Speaking on behalf of the Congress of South African Trade Unions (COSATU) on September 14th Zwelinzima Vavi, General Secretary of COSATU, said that the Government needs to follow a new economic direction in order to revive the currently “dysfunctional economy.”

According to Zwelinzima Vavi, unemployment levels in South Africa are worsening and the economic conditions of the country are deteriorating. He also stated that nearly a quarter of the country’s population is currently receiving some form of social grants from the Government. Explaining his views on the situation, he said, “it’s a crisis pointing to the dysfunctionality at the core of our economy.”

As a potential remedy Zwelinzima Vavi introduced COSATU’s set of economic restoration policies. Under the congress’s proposal taxpayers classed as “super rich” should be levied at a new income tax bracket. Additionally, a “solidarity tax” would be instated, which caps the salary growth of the top 10 percent of national earners, and spurn wage increases for the bottom 10 percent of taxpayers. The increased taxation of wealthy citizens would also be paired with higher tax rates on luxury items, a new land tax, and zero tax rates on sales of basic food stuffs, domestic electricity medicines, water, and public education.

For local companies COSATU proposed imposing a transformative tax to encourage the “closing [of] the apartheid wage gap”. Further, export taxes should be instated on strategic minerals and metals, in order to encourage the local procurement of supplies and machinery. Additionally, the ideas of financial transaction taxes and capital gains taxes were raised.

In regards to wider economic policy, COSATU also proposed the creation of a state-owned bank, which would be aimed at catering to working-class South Africans. Further, it was suggested that critical national industrial sectors like mining and petrochemicals should also be nationalized, and a state body needs to be created to efficiently administer the nationalization.

The entire proposal will soon be submitted to Ebrahim Patel, Minister of Economic Development of South Africa. Local economic analysts have largely backed the proposal, saying that it seems to adequately address the concerns and inequalities faced by the working class, and that the paper carries enough backing to be seriously considered at the national general council of South Africa’s ruling political party.

Photo by Kyknoord