Seeking a new financial future

THERE are three problems in the government:

1. Corruption.

2. Waste.

3. Socialism.

The Western governments who sent President Ramaphosa an open letter were only talking of corruption.

Waste is a separate issue and comes from appointing unqualified people who make the wrong decisions and have poor managerial skills which costs the tax payer more billions. Then, more billions are lost through socialism. Socialism comes in many forms.

High tax is one of them. Threats of expropriation without compensation is another. High taxation is a disincentive for people to work, innovate and invest.

This has been the problem in mining where black economic empowerment is an additional tax which goes to a few selected family and cronies of the ANC.

The social grant system is also a form of socialism. It is a bribe to bribe the poor to give the ANC the vote so they can appoint their family and cronies to get free shares in mining companies.

The poor gain free grants, but lose permanent jobs earning a real income which could be four times higher than the social grants, not an equitable bargain.

The loss of 400 000 mining jobs under ANC rule attests to this debilitating form of socialism. Same thing happened to Venezuela’s oil industry.

The socialists under Hugo Chávez nationalised their oil industry, and now their oil industry is underperforming purely because of lack of capital investment. If you don’t pay capital a share of the profits, capital will not come.

The South African and Venezuelan mining industries have been ravaged by the evils of socialism, and the poor suffer. Ironically, the poor are better off under a regime where capital is paid a share of the profits compared to a system where capital is nationalised.

Very few will invest while we still have 26% B-BBEE in mining, other countries are offering much better tax regimes. Ramaphosa should scrap socialism, AA, B-BBEE and put South Africa on an 8% growth path. As wealth trickles down, poor blacks will be its biggest beneficiaries. NAUSHAD OMAR Athlone