Clem Sunter’s contribution to the “Tutu tax” debate

Shared sacrifice

2011-08-17 12:30

Clem Sunter

“My friends and I have been coddled long enough by a billionaire-friendly
Congress. It’s time for our government to get serious about shared
sacrifice.” So wrote Warren Buffet, the founder of Berkshire Hathaway and
billionaire himself, in a column in the New York Times on Monday.
Coincidentally, I have been saying the same for some time that Barack Obama
should be leading from the front by taking a pay cut himself. He should insist
that members of Congress do the same, particularly those from the Republican
Tea Party.

Buffet’s statement has been lauded in many quarters already and has even been
picked up by Obama in his current roadshow to get himself re-elected. Of
course, it conflicts totally with Republican fiscal policy that the only way to
cure the current budget deficit is through reducing expenditure. Any rise in
taxes should be stoutly revised, the conservatives wing maintains.

In contrast, the reaction of our media and many informed observers to our own
icon Desmond Tutu‘s call for a similar degree of shared sacrifice in South Africa – a country with a higher degree of
inequality than America – has been extremely hostile. Admittedly, he should have couched his request in
different terms and referred to the super-rich generally as opposed to whites
in particular; but the point he makes about achieving a greater sense of
justice and moral probity in our society is as valid here as it is in America.

Moreover, rather than linking any form of redress to the evils of apartheid, I
would have preferred Tutu to have made his plea in the current context of the
economic hard times we are experiencing. The riots last week in London and in other
British cities could easily be replaced here if the poor get the feeling that
they are disproportionately bearing the brink of the downturn.  Shared
sacrifice means something different to what happened when the Titanic sunk and
virtually all the seats in the available lifeboats were taken by first-class
passengers. It means creating the feeling that rich and poor alike are in the
same boat and must share the hardship.

I would propose two initiatives in South Africa to turn the principle
of shared sacrifice into reality. Both initiatives would apply to people
earning more than R1m a year, in other words to the upper income group alone
regardless of race:

1. A compulsory annual contribution to an NGO of the individual’s choice which
carries out essential work in fields such as education, health, welfare, legal
representation and enterprise development in either urban rural areas. Such a
move would offset the serious financial pinch that many of our best NGOs find
themselves in as a consequence of declining corporate and international
contributions. Obviously, like income tax, the contribution percentage could
rise as you head into the heavens of millions of rands of income but it would
start at an income of one million.

2. A one-off compulsory investment into a venture capital fund of the
individual’s choice which is devoted to creating a new entrepreneurial class in
South Africa,
the objective being to create one million new businesses in the economy by
2020. This will lead to the government’s target of five million jobs by the
same date. The size of the investment could be related to either a person’s
wealth or income but with the proviso that he or she is earning at least R1m a
year.

Like Warren Buffet and Desmond Tutu say, the time has come for the super-rich to
come to the party. The only modification I have made with my proposals compared
to those out forward by Buffet is that, bearing in mind the difference in
personal wealth between the USA
and South Africa, the threshold for action should be millionaires not billionaires.

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