Hamilton Petersen’s suggestions largely not viable
In The Herald of July 15, Mr Hamilton Petersen largely answers in the affirmative his question whether SA is a fragile state or a state in collapse.
Irrespective of whether fragile or collapsed, he suggests some possible actions that could have been taken to overcome the situation while the February 2020 budget was revised and re-tabled by means of a supplementary budget on June 24.
Let’s consider them. The introduction of a wealth tax: The 21st century started with 16 OECD countries imposing a wealth tax, and the third decade of this century sees only four of those countries who have not yet abolished their wealth taxes. A wealth tax brings to light the four Rs of taxation: to be a source of revenue, to be an instrument of redistribution, to be an instrument for re-pricing, like in the case of the sin taxes, and to be imposed only by a representative authority.
The wealth tax proposed for SA by the late Professor Sampie Terreblanche and supported by Archbishop Desmond Tutu was aimed at the redistribution function. This view received support from Piketty in 2013 for all owners of capital — he called it a tax on capital — and recently by Professor Woolard and her researchers.
A wealth tax imposed with r-distribution as the motive should ideally be an earmarked tax, meaning that its proceeds will only be used to uplift the less privileged. Apart from many other matters of principle and of pragmatism involved in imposing such a tax, the guarantee that it will only be applied to the earmarked objective is the only one I want to underline.
I have my doubts that our government will be able to ensure taxpayers of that, not until all the evidence before the Zondo Commission has seen the guilty all wearing orange overalls for life. In addition, at a time like this, when the economy needs stimulation, the introduction of new taxes is counterproductive.
The stimulus needed is what the National Treasury has in mind by the tax relief measures reported on page 11 of The Herald of July 15.
The introduction of the National Health Insurance supported by the nationalisation of private hospitals: There were far too many aspects of the proposed NHI that were not clear when Covid-19 struck the country to even consider such a hasty step.
The National Health System in the UK came about as a recommendation of the Beveridge
Commission of 1941, but it took the UK until July 1948 to bring this recommendation to fruition, three years after the end of World War 2, which was the real cause of the need for such a system.
In 2001 a socialist-oriented Labour Party government under the leadership of Tony Blair considered the privatisation of elements of the NHS. Imagine privatisation from the mouth of a socialist!
To nationalise the private hospitals must be evaluated by your readers in the light of the many reports over many years in Eastern Cape newspapers about the state of government hospitals in the province. Also consider the consequences of nationalisation in Venezuela.
The elimination of the twotier education system: Let us know how what could not be repaired since 1994 should have been fixed in one supplementary budget.
Free health-care and education: What is meant by free? Do you propose the wealth tax pays for these services?
Redistribution of land: Why exchange the goodwill displayed by AgriSA and other representatives of land owners for the uncertainties created by calls for expropriation without compensation?