Why Such High Inequality? It’s a Family Matter.


By Mike Schussler

We see a lot of grandstanding on inequality.   But this is useless and misleading when the wrong reasons are given for such high disparities.

So what are the facts, and how do they differ from the rhetoric?

The biggest reason for the inequality we see in South Africa is the very high proportion of households without both parents.

The facts speak for themselves:

Of the thirty-six countries in the world which have one third or more households with a single parent, some thirty (or eighty-three percent) also have a Gini Coefficient of over forty.     (The Gini coefficient is the most widely-used measure of inequality)

All of these thirty countries have measured a Gini in the last two decades.

Meanwhile, look at the forty most unequal countries in the world.  You will discover that an overwhelming thirty-nine of them have above the global average for the proportion of single-parent households!

If we look at this another way round, the numbers tell another dramatic story.

In thirty-one of the forty most unequal countries, we see over thirty percent of all children aged under fifteen living in single-parent homes.

This incredible fact is never really written about, or discussed, very much.

However, if you look at the rich countries – which also tend to be more equal – they have about seventeen per cent of children staying in single-parent households. Of these, eighty-eight percent are female-headed.

In the rest of the world, we see that, on average, thirty percent of children live in single-parent households.

The average for Southern Africa is forty-five percent, while the average for the five SACU countries is sixty-three percent!

All five SACU countries are included in the list of the ten most unequal countries in the world, as can be seen in the table below:

Table 1.  The 10 most unequal countries in the world!
1 South Africa 63
2 Namibia 59,1
3 Zambia 57,1
4 The central African Republic 56,2
5 Lesotho 54,2
6 Mozambique 54
7 Botswana 53,3
8 Brazil 53,3
9 Eswatini 51,5
10 St Lucia 51,2
Source: World Bank. Data from 2003-2018

No SACU country has more than 42% of children living in a two-parent household!

Some fourteen of the sixteen countries in the Southern African Development Community, (SADC) are included in the forty-six most unequal countries in the world. Mauritius and Tanzania are the only ones in SADC which are not to considered very unequal!

This is rarely discussed in the public domain, but it is a fact.

Table 2. Percentage of families with children under 15 years which are missing at least 1 parent.
1 Eswatini 70
2 Botswana 65
3 Namibia 63
4 South Africa 59
5 Lesotho 58
6 Jamaica 52
7 Saint Lucia 50
8 Gabon 49
9 Haiti 49
10 Zimbabwe 48
Source: UN household size and Composition Around the World 2017, Data mainly from census data and ranges from the years 2003 to 2005.

Judgemental observers, who may often have a hidden agenda, fail to realise a major cause of poverty and inequality in the SADC countries is the high numbers of children living in single-parent – or even in no-parent – households.  Often this is from the impact of HIV.

Even though almost one-third of children in many countries are raised by a single mother, it is relatively difficult to find detailed data on single-parent trends and statistics, whether worldwide or nationally.

It is obvious, though, that it is far harder for single parents to make ends meet. They have to divide just one parent’s time and effort between bringing in an income and raising their children.   This is never easy.

In my opinion, the data is clear in demonstrating that the major cause of inequality is a high proportion of children living with a single parent. Unemployment, of course, is another major factor, and I will return to this in a later article.

I am amazed that so little research has been dedicated to the role of those families which are not headed by both parents.

A consequence is that when inequality is discussed, it often tends to be wrongly blamed on high earners, or on the colour of one’s skin

If we do not address the number of families without two parents, we could change every pay structure by 180 percent – and South Africa will still be one of the most unequal countries in the world!

Talk about myths and slogans.   This is the worst grandstanding we have done in South Africa and it has wronged both the citizen and the debate!

Mike Schussler is a leading economist and number cruncher.  He heads economists.co.za

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Can we Toque? Restaurant review. Paul, Morningside.

Even the cups are called Paul

By John Fraser

For moi, the most creative and wondrous nosh to be found in any restaurant will emanate from the pastry section.

And, certainly, any attempt to recreate/franchise/imitate/syndicate/clone the glory of Parisian patisseries in sunny SA must be welcomed.

Never having ventured into its sister Melrose Arch establishment (if a place also called Paul can be described in the feminine) I was delighted to see that a new Paul bakery has popped up in the highly-poncy Morningside mall.

Fortunately, my favourite PR lady in all the world suggested we give it a try, although we had earlier arranged to meet in the neighbouring Tashas, and I had already been seated there when she arrived, only slightly late.   Without ordering, we crossed the House to the opposition benches.

As we approached Paul, we were greeted by the allure of a glass-fronted display cabinet of pastries, and a few smiling staff, many of whom seemed to have been christened Paul, as they had that actual name on their aprons.   Impressive recruiting, mes braves.

The pastry display was attractive, yes. But lacking that extra wow-factor.  The same day I visited Spar and Checkers outlets, and neither had a pastry choice that looked too shabby compared to that of Paul.  As they should have done.

The service was very welcoming, but notre garçon seemed a bit slow in producing our simple order.

It wasn’t yet lunchtime, so Mademoiselle opted for what I assumed was a Croque Monsieur, but which looked over-bready and heavy to me.  I was told it was OK.  No need for lunch.

I opted for a chocolate éclair, the stuffing of which was over-sweet and which had a topping layer of chocolate which looked as if it had been applied by a kindergarten finger-painting class.

It was certainly edible and was certainly eaten.   But elegant Parisian patisserie perfection?  Non.

As I was leaving, I ordered a takeaway of two pains au chocolat (pronounced “chocolate cross-aunts” by the locals).    Both were excellent.   However, they were entombed in a cardboard box, itself inside an enormous paper bag.  Several forests had died so I could walk away with my twin patisseries.   This probably means that the doggy bags from Paul are large enough to accommodate an actual Alsatian.

The coffees – filter and cappuccino –  were excellent, each coming with a minute biscuit. And for some reason, we were also given some delish bread rolls and butter.   I didn’t see the bill, but I assume they were free.

I did glance at the rest of the menu, which elevates the place from a bakery to a restaurant, and I will certainly pop in again to sample a more substantial meal.  Pasta, burgers, sandwiches, a cheese board and even more hearty fare are on offer.

Looking at the wine list, the mark-ups seemed very high, but they are not unusual for the neighbourhood.     Shame that a bottle of wine of reasonable quality would force a diner at Paul to rob Peter so they could, er, pay Paul.

With a thoroughfare truncating the place, it is not quite as warm and welcoming as I would have liked, and I suspect there may be heating challenges when winter approaches.   The tables are a bit close together, as we discovered when a toddler at the next table decided to break the sound barrier.

However, I understand it was the first day the place had been open, and ours was an enjoyable visit.  (Maybe the three small bread rolls with butter had been an opening-day gift?)

Add a bit of polish to the paltry pastries at Paul, and I suspect that neighbouring Tashas (where I find the coffee much, much less enjoyable) could find itself in serious trouble.

Rating:  I give it 4*

Key to the Ratings:

1*    Dog food is nicer

2*.  Cat food is nicer

3*.  Not bad if Woolworths is sold out of ready meals.

4*.  I like it

5*.  I love it.  Not to be missed.

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Wine tasting podcast: Avondale Qvevri 2018

A luscious red

No pretension with this podcast. A group of wine enthusiasts pores over a poured glass of Cape Red, the Avondale Qvevri.

Michael Olivier introduces the wine to Cova Advisory’s Duane Newman, economist and investor Chris Hart and Clientele’s Malcolm Macdonald.

The ZA Confidential panel also discusses the joy of experimenting with new varieties of grape and the need for restaurants to be more imaginative and informative with their wine lists.

Click below and join the fun!

Eskom: Infested with Parasites


By Anthony Turton

We have just hit Stage 6 load shedding. This is uncharted territory so let’s unpack it a little.

Some years ago, I wrote about a startling fact that few people were interested in. That simple fact was that Eskom, our national energy utility company, was running on standby generators.

Nobody responded, so I shut up and moved on, but I never stopped thinking about this simple, startling fact.

Why is our national power utility running on standby generators?

The answer is complex, but one element of that answer involves diesel fuel. You see, a lucrative contract was given to a politically connected person to supply diesel.

That diesel wasn’t the cheapest, because the ‘supplier’ never personally manufactured the diesel. They merely bought it from a real diesel supplier who wasn’t allowed to enter the game because of the rules of that game.

That game is called BEE and it has deindustrialised a country that once produced 40% of all the gold ever mined, in all of recorded history, from the Incas to modernity.

That country once pioneered the production of oil from coal. That country once pioneered the first human heart transplant and gave us the first base-bleed artillery capable of firing a tactical nuclear weapon. That country pioneered water treatment technologies that recovered safe drinking water from sewage and it produced sophisticated steels used in highly-specialised engineering processes. The list goes on, but you hopefully get the point.

South Africa used to punch above its weight and was a genuine participant in the global economy. We produced things of value. Sophisticated things. Technologically-advanced things.

Then came BEE, and it changed the rules of the game, by skewing the playing field in favour of those whose only attribute was that they were politically connected.

It actively discriminated against anyone that was creative and nimble in the field of science, engineering and technology. It incentivised the out-migration of those people, merely because the rules of the game deliberately discriminated against excellence, and rewarded those whose sole attribute was their ability to extract money without creating value. This is called rent-seeking behaviour.

The sale of diesel to run the standby generators in the national energy utility enables the extraction of money, but it creates no enduring value, so it’s inherently parasitic. It’s a textbook example of rent-seeking behaviour.

Any organism infested with parasites slowly succumbs to their voracious presence, and eventually, they become so sick that they die a miserable, lingering death.

The collapse of Eskom is imminent for all the reasons noted above. It’s deeply infested with parasites extracting money without creating value.

It’s unsustainable for the same reasons that SAA has collapsed. It, too, had the game being played about the supply of fuel at an inflated cost. But it also had the other games – of supplying toothpicks, serviettes, cookies, butter and buns – all at an inflated cost.

It, too, has separated the right of remuneration from the responsibility of productivity.

South Africa no longer produces anything of value to the world. The mining industry has collapsed, leaving a toxic landscape of hazardous waste that will poison society for the next century.

Denel, that once played at a global level in the field of sophisticated weapons systems, is collapsing after the theft of the intellectual property that used to fuel its engine.

We have become a society that creates, rewards and protects thieves. Parasitic thieves. Ambitious thieves. Greedy thieves, with an insatiable lust for money, and an aversion to honest work and creativity.

South Africa is that animal infested by parasites that extract money without creating value. That poor animal is now emaciated and sick.  Not yet dead, but feeble and suffering.

It will die, for that is inevitable, but before that, a predictable series of things will happen. Those things are inevitable, logical and therefore predictable.

I have seen them before, first-hand when other parasite-infested countries died. I saw it in the Romanian revolution that overthrew the tyranny of Nicolae Ceausescu. I saw it in the Leipzig Option that created rolling mass action to depose Erich Honecker in East Germany. I saw it in the Velvet Revolution of Czechoslovakia.

In all cases, a revolution deposed the parasitic class that had been extracting money, earned by the sweat of the people, without creating value for the nation.

I also saw it in the lingering demise of Robert Mugabe, who destroyed a proud nation because of his ruthless control over the extraction of money without the creation of value.

This is what I believe the inevitable implosion of Eskom, SAA, PRASA and every other SOE is all about.

We are witnessing the death of a destructive system called BEE, that has sucked the lifeblood from a once vibrant economy and replaced it with a new breed of oppressor, that preys on the poor and vulnerable portion of society that they once claimed to have liberated.

The oppressed have become the oppressors, and technological advancement is no longer possible as we enter the New Sanitation Dark Age, where raw sewage flows freely in many towns and cities of South Africa, and where pumps have ground to a halt because electricity production has been compromised by a class of parasite that is encouraged to supply diesel at inflated value, but is protected because of patronage.

Professor Anthony Turton is an environmental advisor, speaker and author.   This article is based on a Facebook post composed by him.

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Taxing pressure from inflation on the Suburbanites


By Mike Schussler

11th December 2019

Today, we were told SA inflation had come out at 3,6% – the lowest rate since December 2010!

But what if I were to tell you that, for a suburban dweller, inflation remains very high, and is essentially a tax on the suburban lifestyle?

Screenshot 2019-12-11 at 16.27.20
Necessity Inflation: More than doubles the inflation rate in the suburbs

For our suburbanites, the basket of goods and services on which their inflation rate is calculated is made up of some things over which a parent in the suburb has no real choice – which I term necessity inflation.

It is comprised of school fees, petrol taxes, armed response, electricity, water, healthcare and medical insurance, and so on.

However, tertiary education fees and boarding fees are excluded, as these are not a necessity for most.

For petrol, this inflation includes only the South African components – such as taxes, levies and margins on fuel that the government directly controls. I accept that the actual basic fuel prices are not something that the government can control.

Generally, necessity inflation can be summed up as a measure of the price which is required to have your kids in reasonable education, your health security and the cost of getting to work.

Then it includes the basics of life – such as water and power, which are needed to survive – and property taxes we have to pay.  I have left out tobacco and alcohol as those incur taxes on indulgences that one can do without. Or so I am told.

I also left out VAT, personal income tax, and so on.

Anyway, necessity inflation is nothing but a tax on people for maintaining their standard of living, for wanting the right to quality education and health care – avoiding the death traps that are ironically called ‘public health’ facilities.

This part of the inflation mix has never been inside the inflation targets since the current calculation method started in 2009.

It is a screaming indictment of the failure of government, with people frightened by low standards and poor service delivery by the state.

Globally, education, security and health care are generally considered essential services that most countries try to excel at.

Not so in South Africa, where the body count from murder is extreme, while women dare not go out at night due to fear of attack.

Our fee-free schools have bad reputations, and SA’s results in international comparisons show outcomes that are so poor that most governments would react by resigning in disgust. Not ours.

Public health is a lottery, as admitted publicly by health department officials. Privately, some have whispered it could even be a crime against humanity.

Water and power are no longer of the same quality as before – but in price terms, they have increased far above most things (See 10-year graph below).

Screenshot 2019-12-11 at 16.29.53
Massive jumps in the prices of suburban necessities

I also assume the suburban consumer is honest and pays for her water and lights, and needs a car – as safe and reliable public transport is often not available to the suburban public.

The simple truth is that it is expensive to live in the suburbs and to want a reasonable quality of education, health and security. I certainly define ‘reasonable’ as just average, or even just fairly close to a liveable standard of living.

This is not a matter of race. My black suburban neighbours all want the same basic standards for their families.

So suburban South Africans who want even mildly reasonable security, schooling and health find themselves in an effective tax trap – having to pay again for the things they should normally expect to be provided by the state.  These prices increase far above other components of inflation further enslaving the working middle class.

Suburbanites are thus prisoners of a failed regime, deprived of the human right to fair standards of health, education and freedom from fear.

In contrast to necessary inflation, demand-side inflation – the upward price pressure on goods and services – is now in free-fall due to near-zero GDP growth.

Indeed, it is pretty evident that deflation is happening in the demand side of the economy, whose weighting is nearly 80% of the national inflation basket.

Demand-side inflation has been below 6% since April 2009, and is not the problem! The demand inflation of people living in SA’s suburbs is lower than the inflation rates in the EU, the US or Japan.

It is the other 20% of inflation, the necessity inflation, which pushes the headline inflation far higher.

From the demand side – the choice side – consumers generally get great value for money, with very reasonable food and clothing prices.

Freedom of choice has led to lower prices, but fears have increased the overall inflation level for many – due to their need for essential services.

This is the unfortunate situation the suburbanites are in. The headline inflation rate is far lower than the actual inflation they suffer (see the first chart), because of all the extras they need to compensate for the state’s failed delivery.

Inflation at 3,6%?  Pull the other one!

Mike Schussler is a leading South African economist and data analyst.

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South African Airways saga puts a spotlight on the role of directors


Maleka Femida Cassim, University of Pretoria

The board of South Africa’s national airlines recently took a unanimous decision to go into voluntary business rescue. The step removes the threat of the directors being sued by creditors for reckless trading – for now, at least.

The airline told its staff two weeks ago that it wouldn’t be able to pay staff salaries. It had become increasingly clear that the airline was in deep financial trouble. From available evidence – including information passed to the parliament’s standing committee on public accounts – the airline continued to trade even though it was technically insolvent and unable to pay its creditors.

If it is found that the airline continued to trade in insolvent circumstances, South African Airways could be guilty of reckless or fraudulent trading under the Companies Act. Fraudulent trading is when a company continues to trade and incurs debts when its directors know there is no chance of it ever being able to pay its debts. This is both a criminal offence and a civil matter.

Reckless trading is where the directors do not know, but should reasonably have known, that the company was unable to pay its creditors. Reckless trading is a civil offence.

These laws apply to state-owned enterprises too. Even though the government, as the shareholder of the airline, would have had a say over the board, it is the board that is legally accountable for the solvency of the company.

Breaches of company law have potentially serious legal consequences for the board of directors. Trading in insolvent circumstances means that the directors could be personally liable for the losses sustained by the airline. They could also, at worst, find themselves behind bars if they are found by a court to have traded fraudulently.

But there could perhaps be mitigating factors for the South African Airways board. For instance, there was some uncertainty about whether loan guarantees and additional financial support from the government would be made available to the airline.

Nevertheless, the Companies Act stipulates that the ultimate responsibility for ensuring that a company is solvent falls squarely on the directors – regardless of whether it is state-owned.

The South African Airways saga serves as a warning to directors of other state-owned entities, such as the power utility Eskom and the South African Broadcasting Corporation, to be as mindful as directors of private companies or public companies of their fiduciary responsibilities.

There are four ways in which directors can be held responsible for reckless or fraudulent trading.

Four ways directors can be held liable

First, the directors can be held personally liable for any losses or debts sustained by a company as a consequence of their reckless trading. This means that they are at risk of having to compensate the company out of their own pockets.

In my book on company law remedies, I explained that the directors could be sued for this compensation by trade unions, or by other stakeholders. They could do this by using what is called the derivative action on the company’s behalf. This a powerful weapon for stakeholders. It empowers them to sue the directors on behalf of the company to recover compensation for the company itself.

Stakeholders may, for example, use the derivative action when the directors are not complying with their legal duties to the company.

For example, the Lewis Group, a large South African furniture retailer, was recently subjected to derivative proceedings brought against it by a shareholder, David Woollam. He sought to bring the derivative action to hold the Lewis directors accountable for lack of corporate governance and various other matters. He was unsuccessful in his efforts, but the case underscored the potential use of the mechanism.

The derivative action is available in a wide range of countries, including the United Kingdom, the United States, Canada, Australia and New Zealand.

The second way in which directors can be held accountable is by having criminal charges laid against them for fraudulent trading under the Companies Act. The act makes provision for directors to be fined or imprisoned for as long as ten years if they are found to have traded fraudulently.

Thirdly, the Companies Act requires the court to declare directors delinquent if they trade recklessly or fraudulently. A delinquency order has severe consequences. It bars a person from being a director for at least seven years, or even for a lifetime.

Fourthly, creditors can hold the board of directors personally responsible for the company’s debts. They could claim the amounts that the company owes to them from the directors personally.

Business rescue

The board of South African Airways has gained some valuable breathing space by passing a resolution to put the airline under business rescue. This could serve to protect the directors from being sued for reckless or fraudulent trading. And it will protect the airline from any attempts by creditors to liquidate the company.

But the initiation of business rescue does not necessarily mean that the airline’s board is free of the consequences if it is found to have violated the Companies Act. This will only become clear as the business rescue attempt unfolds.

If the business rescue is successful, the directors are likely to avoid personal responsibility for trading recklessly or fraudulently. But if the attempts at rescuing the business fail, and the airline has to be put into liquidation, there is a risk that the directors would be held personally liable for the airline’s debts.

Likewise, resignation does not free directors from liability for any reckless trading that took place while they were on the board.

This all shows that the boards of all companies – including state-owned entities – must be careful, and must not allow the company to trade in insolvent circumstances.The Conversation

Maleka Femida Cassim, Professor of Company Law, University of Pretoria

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Can we Toque? Restaurant review: Dosa Hut, Fourways.

A dose-a deliciousness

By John Fraser

I have never been to India, apart from a refuelling stop (the plane, not me) at what was then Bombay airport.  So what do I know about Indian food?

Well, I do know it is complex, incredibly varied and often magnificent.

Fortunately, my sari-swinging Indian chum had spotted that an offshoot of the Fordsburg-based Dosa Hut had opened in Fourways, and she was determined to force-feed me my first-ever dose-a dosa.  (A dosa is a crispy pancake-like wrap).

She knows her Indian food and had chosen well.  This was the real thing.

The place displayed a few teething pains, but the food was brill.

I had a chicken dosa, which was a bit lacking in chicken, but which had all the right flavours, with three dipping sauces and a fiery kick.  A baptism of fire, but in a nice, lip-smacking way.

Our group also tried a masala dosa, a superb bean curry, and an excellent veggie biriani. We each finished with a very small but very, very enjoyable kulfi.

The next table was devouring a bunny-chow each, the Durban delight which consists of half a loaf, hollowed out and filled with curry (which is what we ignorant westerners call an Indian dish with a gravy).

And then I ordered another six dishes to take-away.    With rotis, which were superb.

The food, then, was authentic, excellent, and it was superb value for money.   Five out of five on the yum scale.

What wasn’t great?    The waiter was slow, unanimated, unwelcoming and awful.  Not that I blamed him.   He had clearly received little training, and the management seemed to be so obsessed with fitting out the new vast restaurant that they had given scant attention to trivial things…like customer satisfaction.

Of great personal sadness, however, was the inadequacy of the wine list.   When I say inadequate, it is an understatement.  There was no wine list.

The place is halaal.    Booze-free.    No wine, no beer.  The waiter mumbled something about the place next door selling alcohol, but I decided that as I was driving anyway,  I would opt for water.

For me, this is a big failing.  I have no wish to force anyone to partake of the nectar of the Gods (my God anyway), but I resent their insistence that their prophet should dictate whether or not I enjoy a beer with my curry.

When I return – and I shall – I will order a massive tonic water, with ice and lemon.

You may already have guessed what I will be carrying in the flask in my top pocket.

Rating:  I give it 4*

Key to the Ratings….

1*    Dog food is nicer

2*.  Cat food is nicer

3*.  Not bad if Woolworths is sold out of ready meals.

4*.  I like it

5*.  I love it.  Not to be missed.

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Podcast: Wine tasting of the Thunderchild 2016 red blend

Thunderchild Wine pack shot copy
A charity red blend you don’t need to be charitable to enjoy

Another Cape red wine has been presented to our long-slurping panel of tasters.

It is a boisterous blend – the Thunderchild 2016.

Epicurian of excellence Michael Olivier has ordered his sommelier and butler to uncork it for an extinguished panel of tasters:  Duane Newman from Cova Advisory, economist and investment strategist Chris Hart, and the long-suffering Malcolm MacDonald from Clientele.

The podcast also features a successful experiment to enhance the wine by aerating it.  Something you should definitely try at home.

Click below for a fun listen…

Is speech now free in SA?

Free speech: a vital freedom?

By John Fraser

It was good to see the South African Sunday papers departing from their regular theme of bent politicians, sleaze and corruption, so they could cover another important issue: that of free speech.

The Sunday Times reported that the Supreme Court of Appeal had ruled in favour of a journalist and diplomat Jon Qwelane.   A homophobe, he is a disgrace to both professions.

The Court was asked to interpret the Promotion of Equality and Prevention of Unfair Discrimination Act (Pepuda), which has been on hand to punish and imprison people for using racist and other offensive language.

“In essence, the court ruled that while the intentions of the law are noble, it oversteps the mark in curbing free speech,” the ST reported.  (Similar reports are also available in other Sunday Newspapers).

Thus offensive language “may be hurtful without being hate speech…as long as it doesn’t promote hatred or incite violence.”

Homophobia, then, is OK as long as you don’t incite or resort to violence. To do that legally, you need to go to Uganda, where Qwelane loyally served as the SA High Commissioner.

The pendulum has rightly swung back from the brutal racism, homophobia and other horrors of the apartheid regime, but the Court now seems to be asking whether it has overshot the mark, and the judges appear to have just swung the pendulum back again. Just a bit.

The writer and actor Stephen Fry spoke out for free speech when he said:

  • “It’s now very common to hear people say, ‘I’m rather offended by that.’ As if that gives them certain rights. It’s actually nothing more…than a whine. ‘I find that offensive.’ It has no meaning; it has no purpose; it has no reason to be respected as a phrase. ‘I am offended by that.’ Well, so fucking what.”

I have heard similar sentiments from the writer Salman Rushdie, against whom a fatwa, or death edict, was issued by an Iranian Ayatollah because of his book: ‘The Satanic Verses’. Said Rushdie:

  • “Nobody has the right to not be offended. That right doesn’t exist in any declaration I have ever read. If you are offended it is your problem, and frankly, lots of things offend lots of people.”

If course, neither was speaking directly about the situation in South Africa, now or in the past.

However, it seems that South Africa, thanks to the Supreme Court of Appeal, has moved a step towards free speech, recognising that being unpleasant and offensive is not necessarily a crime.

Of course, we must continue to be sensitive to the country’s racist past, just as we must be wary of present racism, homophobia, abuse of women and children, and a whole range of other evils.

But the Constitution does protect all of us, and the uncomfortable is not always unlawful.

EFF rabble-rousers can say all sorts of unpleasant things against white farmers, but while being awful and distasteful, it seems that they will cross the line only if they urge violence against the Boers.

And just think…the K-word may now be legal again?   Even though it will be a brave person, and a pretty despicable one, who puts that to the test.

No doubt, there will be another attempt by some MPs to tighten-up the legislation, and they may well do so.

Which could take us back to a situation where people can be imprisoned for (peacefully) speaking their minds?

This is not a subject on which there could ever be agreement, just as I don’t ever foresee a peaceful agreement on the status of Jerusalem.

Until the SA politicians tighten up the law, though, it seems we all can exercise a bit more free speech without the fear of being dragged to court.

This may be a relief to some, even if, at the same time, it lets that shit Qwelane off the hook.

(For a detailed interpretation of the judgement, please check out https://constitutionallyspeaking.co.za/why-the-hate-speech-provision-was-declared-unconstitutional-and-what-happens-next/ )

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Theory of a tax revolt: Is South Africa on the brink?

Trust in government, not tax rates, determines citizens’ attitude to taxation.

Roshelle Ramfol, University of South Africa

Tax revolts date back to biblical times. Throughout the ages, they have exhibited similar symptoms of a decline in taxpayer morale and confidence in a government’s ability to manage public finances for the greater good of its citizens.

Recent public outcries in South Africa signalling dissatisfaction and concerns over the management of public finances suggest that the country could be on the brink of a tax revolution.

While taxpayers have a civic duty to be tax compliant they are not donating taxes in an effort to be altruistic. There is an expectation of a return in some form. Recent events suggest that South Africans are becoming increasingly restive about paying taxes to a government mired in allegations of corruption. This explains why sentiments of a tax rebellion are growing.

In a recently published paper, I reviewed some of the literature on tax compliance. My aim was to establish the theoretical point where tax compliance shifts to resistance. I also extended my analysis to South Africa by extrapolating the legal implications of a tax revolt.

The study found that the fine line between tax compliance and resistance lies where the government creates an equitable distribution between collective costs and benefits. Often the threat of a tax revolt is a measure to renegotiate the terms of fair exchange and a mechanism to mobilise the association that disintegrated between taxpayers and government.

Perceptions about fairness

Governments use tax policy to achieve a number of objectives. These include steering economic growth, changing the behaviour of citizens and raising money to finance programmes.

Tax policy and its implementation is, therefore, the closest and most contentious interface between a citizen and a government.

People’s perceptions about the fairness of a fiscal regime are crucial.

Simply put, tax revolts arise when the government receives tax payments but fails to deliver the perceived reciprocal benefits.

Society is not naturally motivated to pay tax. Voluntary compliance is fostered by establishing consent, trust and legitimacy in a fiscal regime. This means that the government must ensure that compulsory taxes are acceptable, fair and beneficial to citizens.

One of the main motivations to rebel is when a tax regime is perceived to be unfair and oppressive. A tax revolt is effectively a mechanism for citizens to renegotiate the terms of exchange.

A tax revolution may not merely be based on a rejection of taxes. It may be a mechanism to seek restorative action to improve government performance.

Factors that drive compliance

At the outset, tax compliance decisions are determined by an individual’s tax morale. The benefits of promoting tax morale hold immense potential for tax revenue generation. A taxpayer’s level of tax morale is a strong motivator to comply with – or resist – taxation. Countries demonstrating higher ratios of tax to gross domestic product have higher tax morale.

A combination of psychological and sociological factors influence tax morale. Public perception studies conducted by the OECD confirm that a citizen’s age, gender, religious beliefs, level of education and trustworthiness of government are determinants of tax morale.

Another factor affecting compliance is whether taxpayers believe that there’s a contractual agreement between them and the government under which social security is exchanged for paying taxes. Government’s credibility, or trustworthiness, plays an important role in this fiscal contract.

In South Africa, this contract has been under strain following instances of widespread corruption and wasteful expenditure by various state-owned parastatals and government institutions. These events have negatively affected both parties: the government’s credibility and competence and citizens’ tax morale.

Under these circumstances of distrust and malaise, a taxpayer may question the rationale for paying taxes. After all, why should citizens make tax payments if it means they’re simply financing state corruption?

Reasons for revolt

South Africa’s current economic, political and social context presents many determinants of taxpayer resistance: a high tax burden; loss of confidence, credibility and competence in government; low taxpayer morale; and increased frustration from government’s lack of commitment to arrest the rampant corruption and misappropriation of tax funds.

But is a tax revolt the answer?

As a last resort, revoking one’s consent to tax and embarking on a full-scale tax revolt may seem like the only available option to restore the terms of the fiscal contract. However, historical accounts of tax revolt show that this type of action can expose citizens to the harshest and most repressive measures.

Embarking on a tax revolt is an act of civil disobedience and unlawful. The penalties are harsh and the mechanisms available to the South African Revenue Service to enforce tax collection are far-reaching. They include, for example, seizure and execution of property.

There are other consequences too. When taxpayers renege on their tax obligations it can lead to severe fiscal stress. Ultimately citizens bear the burden of disruption in government services, economic stagnation and inflationary pressures.


An important step is to ensure transparent governance is fostered so that the government can be held accountable for effective spending. This can be achieved by supporting civil society groups that challenge the suitability of government policies and the reciprocal spending of tax revenue.

A great deal of attention needs to be placed on restoring trust in government institutions. The fundamental starting position must be to address corruption, restore trust and legitimacy in government and ensure value is received for tax money. Only then can government start to rebuild its credibility and with it taxpayer morale, and restore a taxpayer’s consent to tax.The Conversation

Roshelle Ramfol, Senior Lecturer, University of South Africa

This article is republished from The Conversation under a Creative Commons license. Read the original article.
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