Things are bad, and we don’t know when things are going to get better. Hunger, job losses, grant cuts and death everywhere. Current social grant amounts were not enough to put food on the table before COVID-19, and now with even more people unemployed, price hikes on basic necessities like food, and people dying at the current rate, this has become a humanitarian crisis.
But we can change this. Last year we came together and made progress with the social grant top-ups, but this has come to an end [1]. Now, with the resurgence of COVID-19 causing coronavirus, we need to put more pressure on the government to act. President Ramaphosa announced plans for the COVID-19 vaccine drive and said the government would look into the viability of a basic income grant [2] but claimed there is no money to help families right now [3].
At a time where we should be hiring more healthcare workers, Finance Minister Mboweni has been cutting budgets on social spending [4], even though multiple experts have presented research to National Treasury and Parliament showing we can find the money by properly taxing the rich. There are over 150,000 people who earn a salary of over R1 million per year [5], who will not go hungry if they pay a higher Personal Income Tax.
Then there are the 300,000 plus multi-millionaires [6] who have mansions and millions in their bank accounts. Researchers have proposed an annual net wealth tax for those whose wealth is more than R3.8 million. There are different tax rates proposed by this research. We support the highest net wealth tax rate of between 3% and 9% [7] because it’s what is needed if we are to increase social grants and take steps to introduce Basic Income Support at a level of a living wage so all our people can live dignified lives. Our leaders have failed to tax the rich properly for decades, so these higher tax rates on the rich are necessary if we are to reverse budget cuts to social spending and have the money necessary to realise the National Health Insurance (NHI) in the next five years.
We live in the most unequal country in the world. Right now, the rollout of COVID-19 vaccines is being prioritised for major investment, rightfully so. But surviving COVID-19 only to face starvation and inadequate healthcare will severely undermine that investment.
If we act now, we can build enough pressure to ensure Finance Minister Mboweni’s budget speech on the 24th of February announces taxes on the rich, which could help many families survive not just COVID-19, but beyond the pandemic too.
Dear President Ramaphosa, Social Development Minister Zulu and Finance Minister Mboweni, we the undersigned call on you to support the decisions, policies and budgets necessary to realise the demands below. Minister Mboweni, you should accept the following demands as “Tips for the Minister of Finance”. We remind you as the Minister of Finance, that it is your responsibility to act in the best interests of the poor majority, and not the greedy few. That is why you must commit to the following demands in your budget speech on 24 February 2021:
1. Increase Personal Income Tax for those earning over R1 million annually from 1 April 2021, at a percentage that helps achieve the demands below.
2. Commit to introducing an annual net wealth tax at a higher rate of 3% for those with a wealth of more than R3.8 million, 7% for those with a wealth of more than R30 million and 9% for those with a wealth of more than R146 million, and include it in the 2021 Rates and Monetary Amounts Bill to be implemented from 1 April 2022. The net wealth tax should be permanent and annual. The process of ensuring the rich declare their wealth should start as soon as possible. Additional measures to address tax evasion and illicit financial flows by individuals and companies must be a priority.
3. We also call for pro-poor interventions and commitments such as dramatically reducing the medical aid rebate and eliminating retirement fund contributions deductions or rebates for those earning over R1 million a year. Tax breaks generally need to be reviewed including the employment incentive and cancelling ineffective rebates should also be key. We also call on you to commit to no increase in Value Added Tax (VAT), other than luxury goods, as this hits the poor the hardest. There should also be no increase in Personal Income Tax for those earning less than R1 million per year as such earnings are often supporting whole households. Beyond these tax commitments, we call for re-allocation of public expenditure and minimising government irregular expenditure.
4. The amandla.mobi community also calls on the Minister of Finance and government to tax the rich in order to implement the following demands, many of which we have campaigned on for years:
- Increase the Old Age grant to R2150 per month, as a step towards becoming a living wage of R2500 per month;
- Increase Child Support grant to R950 per child. The Caregiver grant must be brought back, or at the very least caregivers must be eligible for the COVID-19 SRD grant;
- Expand the Child Support grant to include pregnant mothers;
- Fund the mass roll-out of the COVID-19 vaccine and stop cuts to social spending such in education and health, while also laying the foundations for us to realise a National Health Insurance;
- Ensure public institutions have the funding necessary to realise their mandate. Failing to do so comes at a huge cost. For example, cutting funds to the CCMA will be a huge blow to workers’ rights, while an underfunded NPA makes it harder to recover funds looted by the corrupt.
- Even though the COVID-19 R350 SRD grant was terminated, we’re calling for urgent progress to be made towards the implementation of the long-overdue Basic Income Guarantee (grant) for those aged 18 to 59 years.
UPDATE: With the return of the R350 COVID-19 SRD grant, we support the demands proposed by Black Sash, some of which include the following; increase the R350 COVID-19 SRD grant, at the very least to the food poverty line of R585 per person per month, but ideally the Upper-Bound Poverty Line of R1 268. Government must extend this grant until the end of the 2020/2021 financial year, after which Basic Income Support for those aged 18 to 59 years with no to little income must be made permanent. Government must immediately adjust the eligibility criteria to include adult women who are unemployed and who receive a Child Support Grant on behalf of children. Read more here: http://www.blacksash.org.za/index.php/media-and-publications/media-statements/702-three-month-extension-of-covid-19-grant-highly-inadequate?
We also call on Parliament to listen to and act in the interest of the poor majority by supporting the demands mentioned above.
