Cape Town - Economic and political analysts, as well as civil rights organisations, share a similar sentiment that the Department of Social Development’s proposed green paper on Comprehensive Social Security and Retirement Reform is “far-fetched”.
The department on Wednesday gazetted the green paper which, among other things, proposes a new government-managed fund.
In terms of the proposal, all South Africans earning above a certain income threshold will be required to pay between 8% and 12% of their salary into these funds.
The fund is set to be used to pay social and pension grants to citizens.
Members of the public have until December 10 to comment.
Efficient group chief economist Dawie Roodt said this seems like a back door way of getting into the public’s pocket.
“There is a combination of various things being proposed which inevitably will lead to increasing taxes because there will be a significant degree of redistribution of this new fund. Politicians will gain more power with this proposal.
“I simply mistrust the ANC government. I’m all in favour of consolidating and streamlining certain things, but this will be another opportunity for the ANC to misuse their power. It’s a very grand plan, but I don’t think it’s going to become a reality,” said Roodt.
Political analyst Protas Madlala said the proposal is not well-guided as the pool of unemployment in the country is already very high.
“To ask for more sacrifices from businesses and employees is just too much. Yes, the proposal may sound very noble, but people are already struggling financially in this country.”
AfriForum’s legal team is ready to fight the proposed fund to prevent it from getting the green light.
The civil rights organisation says it seems as if the government is trying to encourage citizens to launch a tax revolt.
Johan Kruger, head of community development at AfriForum, said the proposal was a sign of an ANC that is simply not able to establish sustainable economic growth and that it has reached bankruptcy when it comes to ideas on creating jobs.
“The already overtaxed taxpayer will have no other choice but to refuse to pay 12% of their income additional to the extremely high tax burden they are already facing. The ANC is playing with fire and is bent on testing the patience of communities and taxpayers.”
Kruger added that the ruling party’s welfare state is simply not sustainable.
“An additional commitment such as this one will kill the goose that is laying the golden eggs. Communities are on the edge of a tax revolt, but the ANC is burying its head in the sand and continuing its outdated ideologies and policies.”
Reuben Maleka, of the Public Servants Association (PSA), said given the ongoing corruption and embezzlement of money in the country, the PSA would leave no stone unturned to stop the plans to establish another entity that politicians would loot without shame.
“The PSA regards this proposal as another attempt by government to get its hands on overtaxed workers’ hard-earned money. Government could not even honour the 2018 public service wage agreement and yet expects its employees to buy into these plans that will erode their income even more.”
Maleka added that the matter related to retirement reforms are the responsibility of National Treasury and was not part of the mandate of the Department of Social Development, of which the focus should be on social grants.
Political Bureau