Your stealth tax has landed

State-owned Air­ports Com­pany mak­ing empowerment fat cats richer

Finweek English Edition - - Openers - STEPHEN MUL­HOL­LAND stephenm@fin­

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.

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