Voices

R6 million vs R28 000. No wonder poor South Africans are resentful

2019-01-22 00:03

If ever South Africans needed a sharp kick in the pants when it comes to the wealth gap, two reports released on Monday were it.

Oxfam South Africa launched its annual inequality report, Private Wealth vs Public Good, and recruitment firm Michael Page shared its annual South Africa Salary Survey.

The inequality report was utterly depressing.

Not only did it show that the poor are getting poorer, but the inequality gap is getting bigger – apparently billionaire fortunes grew at $2.5 billion a day during the last year, yet extreme poverty is increasing in sub-Saharan Africa.

The number of poor people living below the food and the poverty line of R441 a month increased to 13.8 million in 2015.

Read: With global inequality growing, education is key to bridging the gap

Meanwhile, the salary survey shone the spotlight on those people who work for a living.

It revealed that top workers in the country (in this case chief financial officers) are earning R6 million a year – about R500 000 a month.

Read: Want to earn R6m a year? This is the sector you need to be in

In contrast, South Africa’s minimum wage, which came into effect from January 1 this year, is R20 an hour – but the minimum wage for domestic workers is R15 an hour.

Taking an average of 40 hours a week, we are looking at about R2400 a month – R28 800 a year – for people who work long and hard, and in many cases support extended families.

I’m in no way intimating that chief financial officers or hotshot lawyers don’t work hard or don’t deserve to be earning wonderful salaries.

It’s just hard for people – the average middle-class South African included – to see these salary scales and not feel resentful.

Last week, City Press published an article on emigration, titled “Sharp rise in number of South Africans leaving the country”.

It was one of the top-read articles online, and had quite a strong reaction by readers and on social media.

It is an emotive topic – both for those who have left and for those who can’t.

Politics, crime and job security were cited as the main reasons for people to leave. But, as the managing director of a UK visa solutions firm said, a large percentage of migrations were motivated by concerns of financial and educational stability.

The countries that most South African emigrants go to are known for supporting the middle-class family – specifically regarding healthcare, schooling and transport.

It somehow seems ridiculous that in a world where people can’t afford food, let alone travel, the super-rich have, according to Oxfam Advocate Louisa Zondo, “enjoyed rates of tax that are lower than what we have experienced in decades”.

In South Africa it is the poor who are squeezed the most – healthcare isn’t great, and is obtained after hours (in some cases years) of waiting; education is wanting and in cases where the state gets it right and creates smart schools, criminals steal the equipment; and we all know the state of the public transport system in South Africa – the poor are left to gamble with their lives in the deathtrap taxis or buses they can barely afford to use.

But increasingly, middle-class families are struggling to pay for these essentials too. Medical aid has become unaffordable for many, schools are charging more to keep the standard of education acceptable, and we all know the prices of petrol and cars.

These are things that generally don’t worry the wealthy. Their healthcare choices are determined by “the best”, even if this means travelling.

The same goes for education – overseas boarding fees aren’t prohibitive for people earning R6 million a year. And when it comes to transport, choices include whether to fly first class or charter a jet.

It somehow seems ridiculous that in a world where people can’t afford food, let alone travel, the super-rich have, according to Oxfam Advocate Louisa Zondo, “enjoyed rates of tax that are lower than what we have experienced in decades”.

Oxfam believes that there are two issues that would play a huge part in inequality reduction.

The first is the need for quality, accessible, free and universal public services to reduce inequality between the rich and the poor and between women and men.

The second is the fairer taxation of the wealthiest to pay for these services.

Oxfam believes that governments are fuelling this inequality crisis by massively undertaxing the wealthy in society. South Africa’s moves towards a wealth tax are moving at a snail’s pace.

After years of research, the Davis Tax Committee’s Wealth Tax Report of March 2018 recognised that “a recurrent net wealth tax may be an admirable and desirable form of wealth tax”. However, it’s going to take years to implement such a tax.

The Davis committee recommended that more work was needed to ensure that the tax was well-designed and would yield more revenue than it costs to administer.

If ever we need to re-evaluate our wealth taxes, now is the time.

The rich would argue that we are taking two steps backwards to move one step forward, but perspective is everything.

When you look at the greater scheme of things, travelling business class instead of first class seems like a small price to pay when millions of people can’t even afford to feed or clothe their children.

• Visser is City Press’s digital editor. Follow her on Twitter @scribblingal

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May 19 2019