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Social grants and ‘black tax’ – a conundrum

According to the Sunday Times, UKZN media and cultural studies graduate Nokubonga Komako has released her research into ‘black tax’.

‘Black tax’ is a colloquial term for how black youths, upon getting a job, are often obligated to support their extended families.

While this isn’t entirely unique to black people, within white populations normally there is a cut-off at the level of first cousins, within the black population you can end up with a situation where simply sharing a surname can imply some degree of obligation.

This is normally seen as a responsibility rather than a burden. The problem gets worse when someone’s earnings situation changes, the Sunday Times report included an example of a woman whose earnings had dropped, whose mother wasn’t exactly cooperating.

My Take

Part of the point to social grants is that they spread the burden of this sort of thing to the whole of society.

Think of how queues work in Woolworths and Checkers nowadays. Instead of multiple little lines, you now have one big line that goes up to multiple tills, if one till has a problem it doesn’t hold up the line the same anymore, and the whole thing works more efficiently.

That’s how social welfare is supposed to end up working – if you suffer a loss of income, that’s fine because your contributions are balanced by everybody else’s, so it all evens out.

Grants don’t promote laziness, teen pregnancy or anything like that. These are things people claim, but the data just isn’t there to support those claims.

The problem really comes in the form of sustainability.

In 2018, News24 covered research out of UCT by Janina Hundenborn, a PhD candidate in the Southern Africa Labour and Development Research Unit.

What she found was that social grants were an important mitigating factor for dealing with poverty, but at their current level they’re just not sustainable.

“There are not enough South Africans earning ‘liveable wages’…The challenge ahead is to ensure economic growth that can both sustain the continued payment of social grants, as well as bring more people into employment,” News24 quoted her as saying.

The key point here being that she identified wage inequality as a major factor in the problem, so cutting the lower end of our wage scale doesn’t really fix it because the problem requires more people to be earning ‘liveable wages’.

In  2017, AfricaCheck looked at the same issue. They found that a long term projection by the treasury found that so long as we have 3% GDP growth per anum we can continue to fund these grants.

In 2017 our GDP grew at 1.4%, less than half of that required growth. It 2018 it slowed to 0.8%.  In 2019, the year started with load shedding by Eskom, which means I for one am not exactly expecting great growth this year either.

To a large extent what has gone wrong in South Africa is not high taxes, it is that our taxes aren’t going to the things they’re meant to be going to.

Because of the high degree of corruption that is present in the ruling party, and the policy of patronage which is cadre deployment, we end up with underfunded services because a lot of the money that’s supported to go into those services has been stolen.

When that happens, we the public end up paying for our own alternatives. If Eskom goes down we start buying solar panels and generators. If our education system is a horror show where principals are impregnating pupils, we send our kids to private schools. If the police become unreliable we buy electric fences and hire security companies. If social welfare isn’t enough, we end up supporting our extended families ourselves.

All of this is very expensive and if you can’t afford it, it slowly becomes a matter of basic rights now being economic privileges that you don’t have, and even if you do have the money to do this it rankles paying for the same things twice.

We often talk about the expense of taxes, but don’t often talk about the expense of paying for those services ourselves.

And when I hear the DA say they want to cut taxes, well, I live in Johannesburg. I cannot say that Herman Mashaba has been worse than the ANC in any way, but putting him in charge didn’t magically solve all of our problems. Things haven’t gotten dramatically better. There are potholes in the middle of my street.

You can see this with the recent protests in Alexandra. The city couldn’t just get rid of all of the people the ANC hired, it still needed to run, and nobody can produce a comprehensive list of corrupt officials when a new government takes over. It takes investigation to figure out who is doing what, and whether that is what we want them to be doing.

It will never be as easy as simply getting rid of the ANC, so when I hear tax cut, I think what services are going to be cut, and thus what we in the private sector will end up having to pay more for because you cannot simply steal less in the short term.

And the next five years is relatively short term, its going to take a lot longer than that to solve the legacy of Jacob Zuma, and Thabo Mbeki before him.

With the AIDS crisis we ended up with a lot of child headed households, and that’s not something we can fix over night, and that is a burden on our social welfare system. If we offload that burden – it doesn’t solve our problem because we go back to those singular, inefficient lines of welfare.

And the DA couple their tendency to promise lower taxes, with a stance on employment that essentially amounts to lower wages with lower job security, so what happens, not just to those who aren’t earning, but to those who are?

Tax, as levied by the government, is a percentage. As levied by family who are not as understanding about sudden drops in income, they’re a flat rate which people can’t always afford.

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