Impose wealth tax on monopoly industries

PRESIDENT Cyril Ramaphosa announced, on Saturday, plans to raise more than R1.2 trillion in new foreign direct investment which is being hailed as the “new dawn”.

The president’s initiative must be commended as a new source of funding would ease the burden on South Africans, who have been paying high VAT and fuel taxes to meet the state’s programmes to address the challenges of inequality created through apartheid.

It is surprising and shocking that the ANC government has never looked at its own policy, which it adopted and announced in the early 1990s to raise investment.

The JSE is dominated by companies that use our country’s natural resources to make huge profits.

The ownership of the listed companies remains white and foreign dominated.

The JSE reportedly has a reserve fund of more than R1.6 trillion and South African chief executives of companies listed on the JSE are known to be some of the highest paid in the world.

An analysis of the 2016/17 financial reports of 25 of South Africa’s biggest JSE-listed groups will reveal a starling disparity between the average pay of a chief executives and that of an employee.

The chief executive of Naspers earned R162.4 million a year, while his counterpart in British American Tobacco went home with R126.7m.

Shoprite (R100.1m), Steinhoff (R88.9m), Mondi (R85.7m), MTN (R72.2m), Anglo American (R70.2m) and Richemont (R122.9m) are a further few examples of the annual earnings of chief executive of the top 25 JSE-listed companies.

In the 1990s, when Nelson Mandela was president, he announced to the world that the ANC would raise money from monopoly industries through the introduction of a wealth tax.

Soon after he made the announcement, many senior ANC leaders miraculously became board directors and shareholders of the companies.

This policy that Mandela spoke of was never implemented and the ANC government looked, instead, to state coffers to fund the massive backlogs in the country.

The government was unable to make good on its promises of free education, land and economic redistribution because of limited funding.

Last year, the announcement of free education was followed by a 1% hike in VAT.

What is strange is that the Freedom Charter, a document adopted by the ANC as its own, talks of the wealth of the land being shared by its people. This can be done by simply introducing legislation in Parliament that would compel these JSE-listed companies to pay a special tax from their profits that would fund the government’s social programme, which includes the provision of free education, welfare, housing and other basic services, and the redistribution of land.

The government has, over the years, been protecting the profits of monopoly industry at the expense of the majority of South Africans.

Ramaphosa must resurrect and implement the ANC plan to raise investments through a wealth tax on monopoly industries.

This will generate trillions in revenue from money made from the country’s mineral and human resources.

This will see a reduction in VAT and fuel taxes, at the same time speeding up the fight against poverty and other inequalities.