Graduate tax is a possible solution to education fee crisis

A GRADUATE tax was suggested as a way to help fund free higher education because wealth tax alone won’t solve the education fees crisis, said Judge Dennis Davis, chair of the Davis Tax Committee, at a panel discussion on whether wealth tax would make a difference to the government’s budget.

“There really isn’t money for free higher education [right now]. And there is even less money in the budget than last year because of the economic recession,” said Davis, who chaired the discussion, hosted by the Wits University School of Governance (WSG) on August 21st.

But what is wealth tax? Professor Imraan Valoodia, Wits’ dean of commerce, law and management, who was one of the panellists, explained, “Wealth is defined as all the things that you earn that are outside of your income. It’s the asset base that you have and the things that you own. So with wealth tax, you’re taxed on the holdings of those assets. So the more assets you hold, the more taxes you would pay.”

Wealth tax is not the sole solution to the higher education crises, Valoodia said. “There are good economic grounds for why there should be a graduate tax.”

“In my view, the essence of the fee problem is that you have people who need to pay fees now. If they pay fees and they graduate, then we are almost sure that they are going to earn much higher incomes. You can give someone money to pay fees now and collect the money back when they start earning incomes,” he said.

Professor Pundy Pillay, WSG research director, shared Valoodia’s sentiments that wealth tax should be one of the avenues. “We are not achieving what we need to in education and health to address issues of inequality,” said Pillay.

Personal income tax is the biggest source of tax revenue for the government, according to National Treasury’s 2017 Budget Highlights. “Growing the economy by 5% or hiking tax at 5% from about 1.5-million tax payers, we would have about an extra R50 billion in the kitty to spend and start dealing with the issues of higher education,” said Davis.

Justin Logie, a master’s student in accounting who attended the event, said he didn’t think a wealth tax was the best way to fund higher education. “The best thing is to have some kind of contribution that is then tax deductible,” he said. “So companies make a contribution and then for that contribution they get a tax refund.”

“You don’t want the effective tax rates on companies to go higher because then they just go overseas. And you need to keep companies within the country in order to make sure that they continue to employ people,” said Logie.

Davis concluded that, “all people in South Africa should be responsible for this country and its development. We need a government that delivers on equality to reconstruct our society.”

 

 

The inadequate land reform programme

The issue of land and the constitution is a hot topic. Wits University Economic Freedom Fighters’ Student Command (EFFSC) hosted a public lecture on the subject by Advocate and Wits law school visiting senior research fellow Thembeka Ngcukaitobi, who said the current land reform programme is inadequate.

“Land is an economic asset that entitles you to a livelihood,” said the advocate. The land reform programme has many failures and those who have managed to benefit in regaining land have, in many cases, seen little or no improvements in their livelihoods.

Students attendees of the public lecture gain new knowledge on the land reform issue.                                                                                                                                                  Photo: Nomvelo Chalumbira

“The Land Claims Commission [The commission that facilitates the current land claims process, is designed to compensate those who were dispossessed of a land right after 1913 as a result of past racially discriminatory laws], which not many know about, has a budget of about R1 billion and is one of the most dysfunctional institutions as it is not performing according to its constitutional role,” he said. The land reform programme has largely focused on the restitution phases (land acquisition) of the process, to the exclusion of land reform implementation process. “Restitution is not going to sort the problem of landlessness. The duty is on the government to ensure redistribution through expropriation. A redistribution legislation draft was written in 2007 and passed by cabinet but not in parliament. Jacob Zuma still hasn’t signed it. A new expropriation act (last expropriation act was passed in 1975) could’ve been passed as early as 2008,” said Ngcukaitobi.

Nguckaitobi said that the government owns less than 20% of land available for redistribution. “More than 80% of the land is in private hands, which the government should take. They have an obligation to take the land and redistribute it,” he said.

“The government is paying too much market related compensation and settling cases they don’t need to. When the property owner can see they can get away with getting more, they will push the envelope,” said Ngcukaitobi.

Ngcukaitobi believes that occupation is not the most progressive method to expropriate the land without any compensation. “We need to force the government to do its job under the constitution. So everyone who is concerned with South Africa should be concerned with land. We shouldn’t only be confined to judicial systems. It’s time to reform the law of contract, property law and private law,” he said.

EFFSC Member singing struggle songs before the public lecture begins. Photo: Nomvelo Chalumbira

During the Q&A session, BA Education student Mangaliso Sambo raised the issue of student accommodation. “Accommodation is privatised by individuals who make money off poor [black] students but the public interest is there. [Black students] cannot afford to pass and be good students if they are still forced to travel from morning to sunset without a chance of rest and have no shelter in close proximity. Residences is not just a land based issue but also an academic issue,” said Sambo.

Third year BA General Wits EFFSC member and organiser Nolukhanyiso Gongxeka commented on the importance of understanding the issue of land reform, “The issue of land is not just about farming. It means taking ownership of the capital and the economic capacity that is owned mostly by white people.”

 

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