Universal Income and the Equitable Redistribution of Wealth

  1. We live in a fantastically wealthy country. However, the wealth in this country is concentrated at the top. The financial fat cats on the JSE and the billionaires of South Africa have rigged the economic and political system in their favor. We need to take drastic action to stop this.
  2. We need to cap income at R2-million per year, and institute a flat tax that removes all net income above R2-million. There is no reason why anybody needs to have greater income flow than this amount. The additional taxation acquired in this way will be used to pay for a Universal Basic Wage.
  3. We need to put into place legislation and policies that cap the maximum amount of wealth that any person can have at R20-million. This will be applied retroactively and all persons currently worth more than R20-million will be subjected to a once-off flat re-distribution tax. Rather than plough this money directly into treasury, it should be invested into a National Income Wealth Fund. This fund will be managed so that it maintains competitive in terms of CPIX and will be used to provide for the Universal Basic Wage. This will also serve to equitably redistribute wealth in South Africa.
  4. We should provide everybody in the country with a Universal Basic Wage of R3,500 per month. We will pay for this through the additional taxes and measures indicated above. Every South African above the age of 18 will receive this basic wage. This wage will not take the place of the social welfare net and payments regarding disability, child and other types of grants.
  5. We must align the Universal Basic Wage so that it acts as a strong stimulus. By taking wealth from those who choose to concentrate it, and by spreading it out amongst a large number of spenders, we will cause a spending rush that will be sustainable. This spending rush will promote our agricultural, industrial and manufacturing sectors. In turn, as demand for products within these sectors grows, there will be investment into these sectors and we will see a snowball effect. Further to this, this spending rush will create jobs, will lead to growth in the real economy, and overall GDP growth.
  6. We must also align the Universal Basic Wage with small business growth. With the security offered by the Universal Basic Wage, people will have the freedom and security to start their own business ventures. We need to be ready to support these ventures through a series of measures including making funding available through the proposed National Income Wealth Fund.
  7. We need to stop corporations and the wealthy from shifting their money overseas and ensure that they pay their taxes. We will need to develop strict capital flow laws to prevent this, and we will require very specific legislation to ensure that this happens.
  8. We need stronger inheritance tax laws. While we have taxes in terms of property, the inheritance of lump sums, funds, income sources, etc. we need to expand these in such a manner that ensures that no-one inherits money in excess of R5-million. This can be achieved through combining legislation on inheritance taxation with new proposals. What we want is a single tax law for inheritance tax.
  9. In terms of working people, we need to ensure that the minimum hourly rate for full-time workers is R40.00 per hour, and the minimum hourly rate for part-time workers is R45.00 per hour. We need to start providing our working class with a livable, dignified and appropriate wage. However, we must temper a minimum wage requirement with the needs of small businesses, and we should develop a system of exemptions for small businesses that cannot afford these labour costs: however, in this case we will still insist on a minimum hourly rate for full-time workers of R31.25 per hour, and a minimum hourly rate for part—time workers of R35.00.
  10. We need to re-examine our trade policies such as SACU; SADC Free Trade Area Agreement; SA-EU Trade, Development and Cooperation Agreement; SACU-European Free Trade Association; SACU-Mercosur Preferential Trade Agreement; SACU-India Preferential Trade Agreement; SADC-EAC-COMESA T-FTA. South Africa has a generally open, liberalized trade policy. We need to insist on that the openness and liberalization of our trade policies comes to an end. We need to impose high tariffs on agricultural, industrial and manufacturing imports, thereby stimulating local production and growing jobs and the real economy. We need to get away from this situation in which export raw minerals and import manufactured goods: we need to start manufacturing goods in South Africa.
  11. We need to break the stranglehold that big finance has on our economy, by taxing speculation on the JSE, imposing a JSE transactions tax, by imposing heavier corporate taxes while at the same time providing tax exemptions for financial institutions that invest in the real economy i.e. agriculture, manufacturing and industry. We also need to enact legislation that will break up the big four banks in South Africa.
  12. We need to increase capital gains taxes to somewhere around a taxation rate of 50% on capital gains.
  13. We need to address the issue of worker ownership. We should have clear legislation in place that sees all companies, corporations etc. with a capitalization greater than R10-million move a significant controlling interest in the entity to its workers. We also need to see shareholding companies be legislated so that they are required to change ownership of shares to workers. In order to assist workers it is suggested that ownership in these cases be seceded to worker-owned cooperatives which can be managed on behalf of workers. These cooperatives would be able to utilize specific commercial skills on behalf of workers and would see that the business of ownership does not affect the everyday lives of workers. We also need to move to a system which sees a portion of corporate net profit being handed over to workers. We would like to move to a system, ideally, which sees workers have a majority controlling interest in publically listed companies.
  14. The effective corporate tax rate in SA is only 28%. This is not acceptable and is far too low. We need to raise the effective corporate tax to 55%. We also need to investigate company taxation legislation to close loopholes and ensure that all companies pay an effective tax rate of 55%. We need to, however, take note of two different themes in our economy. Firstly, we need to be careful about imposing an effective tax rate of 55% on small businesses. What we need is a gradation. Businesses earning more than R10-million per annum will be required to pay the full effective rate of 55%; businesses earning between R5-million and R10-million per annum will be required to pay a full effective tax rate of 45%; businesses earning between R2-million to R5-million per annum will need to pay an effective tax rate of 40%; businesses between R500,000 and R2-million per annum should be required to pay an effective tax rate of 35%; businesses earning between R100,000 to R500,000 per annum should pay an effective tax rate of 30% and businesses earning less than R100,000 per annum should have to pay an effective tax rate of 25%. Secondly, we need to look at the very big businesses and those businesses listed on the JSE: we need to impose a tax code that sees any business earning more than R50-million per year, or is listed on the JSE, will be required to pay an effective tax rate of 60%.
  15. We need to impose additional taxes on companies that are dual-listed on the JSE and other stock exchanges. A tax in the region of 10% on gross profit would be appropriate.
  16. We need to seriously consider a specific millionaire and billionaire class taxation. What is proposed is a 10% tax on the gross income of millionaires and a 20% tax on the gross income of billionaires.
  17. We need to close loopholes in estate and gift tax.
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