Your stealth tax has landed
State-owned Airports Company making empowerment fat cats richer
AT FIRST BLUSH it would seem that the Airports Company South Africa (Acsa) is a rare exception to the disasters we have come to expect from the State’s business enterprises. Although, due to increased interest charges, headline earnings for the year to 31 March 2008 were down by 18% to R546m, its EBITDA margin remained strong at 58%, with a return of R1,62bn, down 1% on the previous year. What Acsa terms “non-aeronautical” revenue sources is becoming increasingly important to its performance.
While overall revenue rose 9% to R2,8bn, the non-aeronautical element increased by more than 20% to R1,43bn. As Acsa is 74% owned by the State, with a further 20% by the Public Investment Corporation (Government’s pension fund manager) that means the State is active in the retail and car rental sectors as a landlord and in advertising as a direct competitor of the private sector.
Acsa MD Monhla Hlahla is a spirited and articulate defender of the so-called public:private partnership, although in her case it’s stretching the point a little, as the only proper private sector interest belongs to a little coterie of black economic empowerment players who together own 4,21%, with staff and management holding 1,19%.
If the State chooses to provide the nation with airports, you wonder why it’s necessary in that process of providing a public service that a few empowerment fat cats should be made richer than they already are. Last year – in an absurdly inappropriate move, given the massive capital expenditure it faced – Acsa paid out almost R1,2bn in dividends.
That means those lucky owners of the 6% slice received a tax-free payout of R50m. You wonder what they paid for their original stake and what valuable rights those shares might have attached to them in regard to future plans as Acsa grows into a highly capitalised giant and spends almost R25bn of our money in the years ahead.
And isn’t it odd that to introduce the empowerment ownership principle when, as the State effectively owned 100%, there was, by definition, already a 90% black ownership stake?
Further, as is often the case with our benighted Government, we taxpayers are being quietly stiffed by those dividend payouts – on top, of course, of 30% tax on profits also paid to general revenues by Acsa. For example, were Acsa to be tax exempt and not expected to pay “dividends” it would have to borrow billions less than it’s currently raising, thus reducing those costs that it must recover from the travelling public. In effect, those costs are being levied upon us by the State in stealth taxes. It’s actually just plain theft when Government extracts taxes from services it’s rendering to us that should be paid for by the taxes we give it.
Did we elect the Government to make money out of duty-free cigars, car rentals and advertising or to provide us with education, safety, electricity, health services and so on? If Transport Minister Jeff Radebe wants to be in business, there’s nothing stopping him, but why should he play around with our money and simultaneously load us with hidden taxes?
Acsa is a Government monopoly. Its charges are set by regulators, Gazetted and based on a formula, whereby it will recover all budgeted operating costs, all depreciation and earn a given margin on its asset base. Therefore, the more it spends, the higher its profits will grow. Man, does that empowerment 4,21% look good, although Ms Hlahla tells me she’s sad that she’ll have to deny them
dividends until 2010.
THE ACCOMPANYING TABLE provides a most depressing view of where the world is headed. The rich will get richer and older and the poor will have kids, many of whose mothers will die in childbirth.
For example, in Canada the risk of mortality in childbirth is one in 11 000, whereas in Niger it’s one in seven. An astounding comparison is that of Luxembourg’s GDP per capita of US$64 000 against Liberia’s $290.
Thus, as the Population Reference Bureau in Washington puts it, the “demographic divide – the inequality in the population and health profiles of rich and poor countries – is widening. The sharply different patterns of population growth are evident: little growth or even decline in most wealthy countries and continued rapid population growth in the world’s poorest countries”.
There are now 6,7bn people on earth. Only 1,2bn live in “more developed” regions, while 5,5bn reside in “less developed” regions.
Short of some sort of economic miracle in the poor world, the only answer for individuals living in it is to get out. Thus, the United States’ anticipated growth reflects its position as a magnet to the poor from all over the world, just as South Africa is a magnet for the destitute millions on our sub-continent, and Europe for those in the north.