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President Cyril Ramaphosa has been very vocal about his plans for a better South Africa and repeatedly reminded South Africans of these plans, aimed at increasing foreign direct investment, stimulating economic growth and boosting employment rates. At the start of his presidency, the country was full of hope, but after hearing countless repetitions of Ramaphosa’s ‘wish-list’ – with no change – these hopes have faded. In this article, veteran professional valuer Peter Meakin refers to Alice in Wonderland – the 1865 novel by English author Lewis Carroll – and makes a comparison between our President’s plans for radical economic transformation and Alice, a young girl who falls through a rabbit hole into a fantasy world where she asks for directions, without a desired destination. Meakin has long been an advocate for the replacement of income taxes and VAT with land taxes as a solution to ease South Africa’s economic burdens. This alternative suggestion has an added attractive twist; it’s in line with the Constitution – certainly more so than other measures already taken. (BizNews welcomes views on a range of topics in the interests of stimulating debate, but does not necessarily endorse the opinions of community members.) – Nadya Swart
By Peter Meakin*
Cyril Ramaphosa’s radical economic transformation is like Alice in Wonderland’s question to the Cat
“Would you tell me, please, which way I ought to go from here?”
“That depends a good deal on where you want to get to,” said the Cat.
“I don’t much care where,” said Alice.
“Then it doesn’t matter which way you go,” said the Cat.
“- so long as I get SOMEWHERE,” Alice added as an explanation.
“Oh, you’re sure to do that, “ said the Cat, “if you only walk long enough.”
― Lewis Carroll, Alice in Wonderland
A Treasury document entitled Economic Transformation, Inclusive Growth, and Competitiveness: Towards an Economic Strategy for South Africa is a wish-list which again repeats the words infrastructure, trade, employment, removing barriers to start businesses and boosting labour-intensive sectors.
On the other hand, advice from Alice in Wonderland is to “Begin at the beginning, and go on till you come to the end: then stop.”
Begin here means discovering the secrets of the most successful countries. That includes Hong Kong and Singapore whose citizens enjoy GDP per capita at purchase price parity of five and seven times more than South Africans, without agricultural or mining sectors.
It is not that Asians can lift more weights or have higher IQs, but as at December 31st 2017 they had foreign direct investments of thirteen and ten times more than South Africa’s $139K million. This funded the machines, equipment and systems that made people more productive. And earned twice the after-tax returns as those earned in South Africa.
Hong Kongers do not own any land at all, but participate in ninety nine year leases. Their rents contribute ±35% to the state budget.
Ironically Minister Mboweni’s 2018 MTBPS started the process of replacing income taxes and VAT with land taxes. This table scrutinises the inefficiencies that led to his proposals for a South African tax-haven.
These are sensational disclosures, even if only half true. It is essential for the Minister to explain why he changed track. And land taxes are implicitly endorsed in Section 228 of the Constitution because it prohibits taxes that “materially and unreasonably prejudice national economic policies”, such as taxes on hard-earned wages, salaries, interest, profits, dividends, capital gains and consumption.
A complaint was laid with Mr Yunus Carrim MP chair of the National Council of Provinces Finance Committee. It argued that as no discussion had transpired or questions asked, South Africa’s opportunity to become like Hong Kong had not been properly explored, and the committee should be reconvened.
He refused. So a complaint was next laid with the Amos Masondo MP, chairperson of the NCOP. He replied that “the Committee cannot be said to have acted unreasonably as your submission was considered,” for it was mentioned in the Committee’s report. I gave him until August 19th to reverse that decision because being considered is a great deal more than being mentioned.
There was still no response, unlike Alice “who had begun to think that very few things indeed were really impossible.”
- Peter Meakin is a registered professional valuer and with the Associate Institute of Valuers SA.
Cyril Ramaphosa: The Audio Biography
Listen to the story of Cyril Ramaphosa's rise to presidential power, narrated by our very own Alec Hogg.