Roger Jardine’s R500bn fund from taxes: Short-term pain, long-term gain

Change Starts Now is a political party that was launched in December 2023 by Roger Jardine, a former director general and banker. It aims to be an alternative political option for South Africans who want change in the country. The party’s manifesto, called the Change Charter, was unveiled in Soweto this week. It includes a ‘Marshall’ plan of R500 billion to redevelop South Africa. In an interview with BizNews, Jardine explained that wartime vocabulary was chosen because South Africa’s current state resembles a war zone. To fund the plan, Jardine is proposing a temporary three-year reconstruction tax. This would include a wealth tax of 1.5%, a corporate tax increase from 28% to 32%, an individual tax increase of 4.5% for those earning more than R1.8 million a year, and a 1% annual charge on retirement funds. Addressing concerns about increased taxes, Jardine emphasised the urgent need for drastic intervention. He warned that if the country continues to decline, the chances of increasing and sustainable tax increases are on the horizon as ‘the gap between our ability to fund constitutionally guaranteed social protections and our balance sheet continues to widen.’ Jardine described the temporary tax increases as a short-term trade-off for long-term sustainability. In response to concerns about politicians misusing the proposed fund, he assured that it would be structured as a ring-fenced fund with oversight by an independent panel. Jardine stated that Change Starts Now supports a strong role for the private sector in state-owned enterprises and believes that black empowerment policies have failed. He criticised the misapplication of procurement policies. Jardine denied representing an agreed position of the business sector in the country or that his party has received a billion rand in funding. He said that finding solutions in South Africa is not rocket science; it can be achieved with political will and effective management.Linda van Tilburg

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Relevant timestamps from the interview

  • 00:00 – Introduction 
  • 01:05 – The need for a Marshall plan
  • 03:37 – The temporary levy and ring-fenced fund
  • 04:34 – Concerns about taxation
  • 05:57 – The role of the private sector
  • 08:38 – Black Empowerment and Procurement
  • 11:19 – Formation of the party and possible coalitions
  • 12:53 – Differentiation from other parties
  • 14:11 – Target voters and funding of the party
  • 16:42 – Motivation for entering politics
  • 17:48 – Leadership and Presidential ambitions
  • 18:51 – Conclusions

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Highlights from the interview ___STEADY_PAYWALL___

R500 billion fund for regrowth – social situation is untenable

I think the key point to understand here is that we are in a social situation that’s untenable. Globally, people are losing hope and faith in democracy. In fact, earlier this year, 250 billionaires and millionaires signed a pledge asking regulators to increase their taxes because they saw it as a way to alleviate this pressure on democracy, and we feel that here in South Africa we cannot regard this problem as a linear problem saying we must first fix the economy and then take care of our people. If we don’t do it concurrently, we’re going to face a different problem. So, we use the Marshall Plan analogy because, if you look at all the measures in South Africa in terms of the number of people dying, it’s as if we’re in a war zone. If you consider the people who are going hungry or are starving, we need that kind of intervention. At the same time, our balance sheet of SA Inc. is under stress. So, we cannot do these things concurrently. This plan seeks to intervene urgently. What we’re saying is we need common cause between the rich and the poor at this moment in our country’s history.

Anticipating future tax increases amidst SA’s Decline, urgent need for drastic intervention

We have come up with a temporary levy.  People are jaded about paying tax because they wonder where their tax money is going. They cannot see the benefits of it. So, we have structured it as a ring-fenced fund, which will be overseen by an independent panel of respected people, including a chairperson who is respected and has integrity. Then, you can actually see where your money’s going. The flip side of this is, that as we continue to decline, the chances of increasing and sustainable tax increases are on the horizon as the gap between our ability to fund constitutionally guaranteed social protections and our balance sheet continues to widen. We think it is a short-term intervention. We intend to stick to the three years. We’ve modelled it very precisely with a team of experts and advisors. We’ve come up with the R500 billion rand amount, which we think will be quite substantive in this environment.

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Ring-fencing fund: Oversight by independent panel to prevent corruption

We have structured it as a ring-fenced fund, which will be overseen by an independent panel of respected people, including a chairperson who is respected and has integrity. Then, you can actually see where your money’s going. The Constitution stipulates that taxes received go to the national revenue account unless directed otherwise by an act of parliament. We intend to govern this by creating a specific act that outlines how this money is spent. We aim to engage South Africans in a true public-private partnership mode with a chairperson that South Africans respect. The projects will be agreed upon and made public. If you’re a contributor, you will be able to see where this pool of money is being allocated. Everyone is acutely aware of the fact that taxpayers are upset about the way public resources are being used. Therefore, we wanted to address this concern upfront.

Proposed tax increases: Short-term trade-off for long-term sustainability

In our manifesto, we state that we’re going to have a series of conversations with people, especially those affected by this. It’s about choices. Our economy is shrinking, we’re sitting at 1%. Load shedding continues. We know that if we fix load shedding, our GDP growth could be 2.5% instead of the paltry 1% that it currently is. The question is, why isn’t that happening? It’s due to political woes. With this social solidarity fund, we’re saying we have to make common cause among all South Africans. We believe that it will unlock the economy. Companies should be making more money, and when that happens, there’s even the prospect of reduced taxes. So, it’s really a short-term trade-off for our long-term sustainability. But at this rate, we’ll probably have to borrow more. We’ll see more social unrest as the government fails to provide social protection. Our public hospitals are in shambles due to budget cuts, doctors aren’t being employed, and so on. I don’t think one part of society can stand on the sidelines while the majority of society is imploding. So, it’s really about looking to the future together.

Corporate tax will have an increase of 4.2% over the three years, bringing it to 32.2%. We’ve modelled it for individuals earning more than R1.8 million. They’ll go from a 45% to a 49% marginal rate. We have a 1% tax on retirement funds and then a wealth tax of 1.5% for everyone who has assets over R40 million.”

Strong role for private sector, give ports to private operators

This is a global debate. We would argue that ‘Change Starts Now’ is investor-friendly. This is about ensuring that South Africa becomes a stable country with robust economic growth. Currently, we have a series of value traps in our system. This plan goes hand in hand with a significant role for the private sector. Let me explain where. Our state-owned enterprises have been a considerable drain on the fiscus. We’re saying we will ensure that we restructure them. We’ve estimated that through the underlying profitability of a well-run SOE, primarily Transnet and Eskom, we should be able to introduce leverage of about a trillion rand. We’re also saying that when it comes to the ports, for example, we often get stuck in privatisation debates in South Africa.

‘Change Starts Now’ unashamedly states that there is a strong role for the private sector here, and we must tap into that. For instance, currently, ships aren’t going through the Suez Canal. We cannot capitalise on that as they pass around the Cape. We’d be better off if we allowed private operators to run the ports for an agreed period. We think it might be more like 30 years, and then hand it back to the state. But in the meantime, we are mobilising private capital to create jobs, unlock our economy, and assure our farmers, manufacturers, and other producers that their products will reach the port for export. So this isn’t merely a social solidarity fund on its own. It goes hand in hand with a strong role for the private sector to further unlock the economy. 

Black empowerment policies: A failed approach, negative for the country

We believe one of the biggest problems we are currently facing is how procurement has been completely misapplied on large contracts to provide water and other bulk infrastructure. There’s been this view that if you give a big contract to a few individuals and they make a lot of money, you can call it inclusion. However, as one economist points out, we don’t actually measure how many people have been excluded when these projects fail to be delivered. This is going to be very important because the public has had enough. There are so many failed water projects in particular where contracts have been awarded and people have been paid, but no service has been provided. So, we will have to focus more on value for money. Governments across the world use public procurement to drive government policy, but here it has failed. We can see there’s been no benefit to it. There’s currently a preferential procurement bill in Parliament. We intend to withdraw that bill. It is not on the right track. It doesn’t deal with value for money. It allows politicians and their families to participate in public procurement. We will have to change that so that the right service providers who know what they’re doing get these public funds to deliver the services to the people of this country.

Are you saying that black empowerment will continue but in another form?

I think we’ll have to see. We’re 30 years into democracy. As I said, governments across the world leverage procurement around strategic objectives. I’m saying this current application has failed. There are bona fide South African companies that have been around for 50 or 70 years with black empowerment shareholders who have put risk capital into those companies. They don’t get these contracts under the banner that these are old white companies, and I come from that sector. I know that there are bona fide black investors in this country who are invested in blue-chip companies, who should be eligible to be providing these services. I think it’s the lens through which BE is applied, that’s really an issue. But I’m very clear that it has been wrongly applied and the outcome has been negative for the people of this country.

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How Change Starts Now differs from other opposition parties: A different roadmap  

I think we wanted to sketch a vision for South Africa and I believe through this manifesto, we are presenting a roadmap that is quite different from other parties in that we’re going into detail. We’re actually saying in this plan that we think we can increase infrastructure as a percentage of GDP to 22% and create 5 million jobs. That isn’t a thumb suck. We’ve looked at the data, we’ve modelled it, and we think it can happen. It requires political will and we’ve introduced the Social Solidarity Fund. So we’re part of shaping a trajectory for South Africa, first of all, in terms of vision. When it comes to coalitions, one of the problems we’ve seen, particularly at the local government level, is that it has tended to be about sharing the spoils. You get this position and  I get that position.’ We want to engage in a coalition discussion based on what is the vision, the platform, and the projects that we want to see implemented for South Africa. So, yes, we’re open to talking to other parties as well, and we’re putting our best foot forward. We’re often told that we are late in the game and the elections are looming, but we are focusing on getting our message to South Africa.

Independent NPA, empower local hospitals, focusing on the fix 

Well, I think it’s very clear that South Africa needs a turnaround plan. We need a strong management team. We need clear ideas. Everyone can say we want to fix crime. Our manifesto says exactly what we think it will take. We talk about making sure that the national prosecuting authority is both prosecutorial independent and administratively independent. I don’t think many South Africans actually realise how that compromises their ability to perform their task. We talk about reinstating specialised crime units. We have very specific ideas on healthcare, for example. We talk about how we want to empower local hospitals so that they can service people a lot better. I think it’s incumbent upon us to get into the mind of a citizen so that they can see the differentiator here is that we are focusing on the fix and we are presenting how to fix South Africa, and that’s what we need to get across to our citizens.

Change is the most frequently used word in South Africa today  

Our research shows that South Africans are ready for change. ‘Change’ is the most common word used in South Africa. There are various categories of voters here. You have people who have voted a particular way over many years. They’ve either stopped voting or perhaps some of them have changed their vote. There are voters who register but never bother to vote. And then there are new voters. Essentially, these are the three groups of citizens who need to engage in the voting process. What we’re saying to them is that we’re now 30 years later, and there have been voting patterns over the past three decades. These voting patterns have had consequences for South Africa. So, when thinking about who you would vote for, consider the consequences of your vote. It’s a crucial moment in South Africa’s history to change course.

No billion rand funding or designated SA business candidate

When it comes to donor funding of parties, I’m very clear. The only thing we can guarantee to anyone who wants to fund our vision is that we will work very hard to foster social stability and an environment in which your business can grow. I’ve read that there are still strings attached and an agreed agenda. Can you imagine if there was such an agenda? We’d be discussing a social solidarity fund today. This is based purely on the solutions that this country requires, according to our view. So no, there’s no agreed position. We will engage with any South African or any South African business that pays their taxes, operates legally, and is invested in South Africa’s future.

There’s no billion rand donation.  I’ve read about this billion rand. We are now registered as a political party. We are legally obliged to disclose our funding, which we will do through the IEC process, and it will become public. Then, you will see that there’s no billion rand

Solutions for South Africa are not rocket science: Need political will and management

I come from a family with almost three generations of involvement in social and political affairs in South Africa. Over many years, I have agonised about the direction our country is heading in. Particularly last year, it took me the better part of the year to decide that I would step away into a very uncertain world, a world that I don’t really know. I’m not a career politician, but I wanted to add my voice as a South African to the direction in which I think this country should be going. That’s my motivation. Moreover, without trivialising the solutions, some of the things we need to do in South Africa are not rocket science. The ideas are there. We need the political will and the management for that. I’ve stepped into this terrain and I’m ready to work with a range of people. I believe there are more South Africans who want to work together than those who want to divide us. That’s the energy that I would like to be a part of.

Roger Jardine for President?  

We do not have a presidential election system in South Africa. So, you can’t run for president. What anyone can do is put their ideas out there, talk to other parties, and discuss the leadership and the type of leadership this country requires. I have certainly stepped into the terrain and I’d like to be part of that conversation. Whether it’s in politics or not, I’ll be part of that conversation. So, what I do know is that South Africa needs leaders who see the people. I’ve been going around this country talking to people at taxi ranks, flower markets, SASA grant holders, etc. The lack of dignity, the way people’s dignity has been eroded, especially in the past 10 years, really makes me angry. I think we need to find solutions collectively and individually. So yes, I’m firmly focused on how I can help fuel that discussion on leadership in this country.

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