A farmworker group plans to picket for wealth tax in South Africa as finance minister Enoch Godongwana steps to the podium for his budget speech today. The marching workers and farm dwellers, led by the Women on Farms Project, will demand that Treasury and the South African Revenue Service introduce additional taxes for the wealthiest 1% of South Africans.
Women on Farms is an organisation that works with women in commercial agriculture, mainly in the Western Cape. It states its mission to be the empowerment and strengthening of women to claim their rights and fulfil their needs while living and working on farms.
The march is set to start at 11:00 from Parliament. Spokesperson Kara Mackay says that, as farmwomen, they demand the wealth tax as one way of fixing structural inequalities South Africa, the most unequal country in the world where 1% of the population (approximately 356 000 people) owns 55% of the country’s wealth.
“At the same time, women farmworkers and dwellers remain landless, experience evictions and earn low wages for the increasingly precarious seasonal work they do on farms,” Mackay says.
They believe the revenue generated from a wealth tax can be used to finance land redistribution, universal quality healthcare, free quality education and a basic income grant for poor South Africans, including agricultural workers and farm dwellers.
“It is immoral that the hourly minimum wage for farmworkers increased by R3.01 in 2020/21 while billionaire Johann Rupert’s net worth increased by 2.5 billion US dollar over the same period,” Mackay says.
The women argue that billionaire wealth is an untapped tax revenue source that can be used to address South Africa’s inequality, budget deficit, and redistributive social spending.
Asking for tax relief
Meanwhile, organised agriculture has serious concerns about tax rates and asks that Godongwana will have sound judgment when it comes to tax levies.
According to Agri SA’s chief economist, Kulani Siweya, they would like to hear the detail of how government will action President Cyril Ramaphosa’s commitment to partner with the private sector for economic growth and job creation.
“Tax relief for hard-hit businesses in particular will enable their growth and encourage job creation,” he says.
“This is fiscally feasible in light of the commodities revenue windfall. Other measures might include a no increase of the excise tax, to help the wine industry recover, and addressing the health promotion levy which has a negative impact on the sugar industry.”
Agri SA believes that this would fast-track these industries’ recovery and promote job creation.
Furthermore, the alcohol industry hopes that the minister will refrain from announcing another hike in excise duties.
The industry has made an appeal to the minister, saying he must consider cutting excessive tax as many winemakers are already struggling to stay afloat.
Vinpro managing director Rico Basson adds, “The industry is slowly but surely recovering from the significant impact that domestic alcohol and travel bans had on our revenue streams. Producers are also confronted with an exponential increase in input costs.”
Basson points out that an average expenditure at farm level could increase by up to 15% (compared to the 10-year average annual increase of 6.7%) with certain input costs expected to double.
“While there is great variation between the respective business models and each farm or cellar has its own set of challenges, the reality remains that the 2022 wine grape crop will, on average, be much more expensive to produce than previous crops.”
Basson adds that wineries may also have to absorb a further nearly 15% increase in glass prices, as well as a double-digit hike in other costs related to packaging such as paper, cardboard, plastic, labels and closures. This, while price increases for wine will most likely move sideways or remain below 5%, as the industry is still working on reducing the wine surplus.
“The wine industry needs to recover and rebuild, and excessive excise tax will put further strain on an already hard-hit industry, which may lead to less investment, as well as job losses.”
Go easy on the fuel charge
Fuel is another item that is heavily taxed in Mzansi. It has become exceptionally expensive over the past year and is a major input for primary agricultural production as well as the broader value chain.
It is for this reason that Agri Western Cape hopes that the minister will not announce a further increase in the general fuel levy and road accident fund portion of the fuel price.
Jannie Strydom, chief executive officer of Agri Western Cape, says, “Primary agricultural production cannot afford another hike in the general fuel levy and road accident fund. We therefore call on the minister not to announce any further increases.”
The organisation further points out that, during last year’s budget speech, the former minister of finance, Tito Mboweni, announced that company tax would be reduced in April this year from 28% to 27% in an attempt to attract more private investment.
A condition for this reduction was that companies would be limited in terms of how estimated losses or expenditure on interest payments can be used to reduce their tax liability.
However, Agri Western Cape has serious concerns in this regard, especially section 20 of the amendment, which states that assessed losses of one year would be limited in the next tax year.
Says Strydom, “If these amendments were to be implemented, only 80% of the losses can be assessed against future profits. This will considerably reduce the sector’s ability to recover after cyclic events.”
Agri Western Cape hopes that this amendment will not be implemented in the coming financial year. Its recommendation is that wider consultation takes place in order to understand the scope of the amendments.
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