A very sinister idea

David Bullard on the 'wealth' tax proposal being pushed by some academics


One of the great joys of being a motoring journalist way back when was all the travel. Flying down the sharp end of the aircraft at somebody else’s expense to some exotic location to drive an absurdly expensive car that most of us would never be able to afford in several lifetimes.

The accommodation wasn’t too shabby either. I remember one launch when we stayed in a castle in Germany and another when we stayed as the first ever guests in a seven star establishment designed by Frank Gehry in the Spanish winelands.

And then there were the after parties. Copious quantities of booze (after the test drive natch), oysters, gourmet food, cigars and you never had to get your own credit card out for anything.

I attempted to buy a round of drinks for my hosts at the Imperial Hotel in Tokyo once and was sharply told to put my card away. When I checked the cost of the drinks I was very glad I did.


Then there was the launch aftermath when the host motor company would drop a little gift around to your office to thank you for sparing the time to join them on the international launch. Maybe an iPod or a new Sat Nav device. That was over and above the piles of branded t-shirts, jackets and base ball caps that were forced onto you at every launch.

I’m still wearing the orange jacket, rainproof cap, earmuffs and scarf that came with a Jeep launch I attended 12 years ago. Happy days but, alas, no more. It’s going to be some while before motoring journalists are seen clogging up the business class section of a flight to Europe. In fact, it’s going to be quite some time before anybody is seen clogging up the business section of any aircraft I suspect.

One of the annual treats for the elite of motoring journalism is (or was) the annual Car of the Year Award. This is organized by the SA Guild of Motoring Journalists which I never bothered to join. This caused a few problems in the early days of writing for the Sunday Times and a special general meeting was held by the Guild to demand that no motor company lend me a test car.

The vote was carried unanimously so I “borrowed” cars from Investment Cars and wrote about them instead. They generally had the latest models anyway. Since the Sunday Times had the largest English speaking readership (with sales of around 500000 in those days) a couple of the more astute motor manufacturers realized that not being written about in the Sunday Times was worse than being written about by somebody who was not an official member of the Guild.

Eventually the others followed, the test cars became available and the Guild had to just suck it up. On my first few international launches very few of my travelling companions would speak to me unless it was to hiss an insult as I was passing but most of them mellowed over time and developed a grudging respect for me, particularly as they realized that I had embraced the whole ethos of motoring journalism and would invariably be the last man standing at the bar.

Not being a member of the aforementioned elite I was never on the committee tasked with “testing” a lot of cars at the beginning of the year and coming up with an overall winner for the Car of the Year. This, they will lead us all to believe, is a grueling challenge and involves having all types of metal in your driveway to experience first hand and impress the neighbours.

The overall winner this year, after much deliberation no doubt, is the Jaguar I-Pace which is an electric car which costs upwards of R1.7 million apparently. Obviously in a country that finds it difficult to produce electricity a car like the I-Pace is a smart choice, particularly if you own your own power station.

However, it’s the price that has caused ripples of social media comment and suggestions that the choice of winner this year might be more related to some hoped for future launch invitations. A schmooze choice if ever there was one. I have no doubt that the Jaguar I-Pace is much, much better than, for example, the Toyota Corolla Hatch but at the price it bloody well should be. The question is, who can afford it (apart from state capturers) in these troubled times? And wouldn’t driving a R1.7 million car attract unwanted attention as the state mulls over the tempting idea of imposing a wealth tax?

Speaking of which, an article appeared on The Conversation website last week penned by three academics suggesting that one way out of our current economic swamp would be for our trusted leaders to act as Robin Hood and rob from the rich to give to the poor. Presumably, a middle man would be needed to take a small handling fee and ensure fair play.

The idea of a wealth tax is nothing new but, while it might be a more comfortable idea in a country like Germany or the UK, it has a very sinister ring to it in South Africa. As long ago as 2010 I wrote in my Out to Lunch column that the “authorities” would, one day, unilaterally decide that some people had too much money for their own good and it would need to be confiscated and redistributed. Well, it seems that day isn’t too far away and, bearing in mind the numbers involved, the idea is likely to be welcomed by 90% of the population as the following excerpt from the report shows.

Explaining the obvious gap in SA between the haves and the have nots the authors note:

Firstly, in 2017, the 10% richest South Africans (all adults with a net worth over R496,000) owned 86% of wealth, with an average of R2.8 million per adult. In contrast, about 18 million (the poorest 50%) were either in debt or had near-zero savings. With an average net worth of R486 million, the richest 3,500 owned 15% of wealth. This was more than the 32 million poorest altogether.

Secondly, these extreme inequalities extended to all forms of assets. The richest 10% owned 99.8% of bonds and stock – which accounted for 35% of wealth. The top decile also owned 60% of housing wealth and 64% of pension assets. Housing wealth amounted to 29% of wealth and pension assets to 33%.

This is good old commie rabble rousing at it’s best and it will not help to point out that the entry point of R496 000 which admits you to the top 10% of richest South Africans would just about buy you a basic VW Polo when converted to pounds sterling.

I doubt whether many owners of VW Polos in Europe would regard themselves in the same league as the super-rich. Even the average net worth of R2.8 million translates to the equivalent of one quarter of the price of a two bedroom flat in a not particularly salubrious part of London.

The suggestion from the authors of the discussion paper is that a wealth tax be levied on already taxed income from those of us who have it. It could then be equitably distributed to the less fortunate and, hey presto, we could gradually create a more just society where everyone is equally poor.

Now I can’t speak for anybody else but my accumulation of “wealth” has been part of a carefully considered 48 year plan to avoid the need to beg or rely on the state in my dotage. It started with dumping the idea of becoming an actor and rather going for a job with what my father would have referred to as “prospects”. As it happened, those jobs worked out very well and I spent about 25 years in financial markets, albeit starting from a very lowly position of clerk and working my way up.

Something else my father instilled in me was the need to avoid debt and only buy what I could afford. Obviously I ignored his advice and relied on a heavy debt load every month on my Access card when I lived and worked in London.

When I moved to South Africa though I cleared my UK debts and decided to turn over a new leaf in SA. Since 1981 I have never, ever had credit card debt. The full amount has been paid every month, irrespective of how painful that may have been from time to time. I obviously had to have finance for a car and a bond for a house in the early days but I used any spare cash to pay off the bond and when the lease deal on the car came to an end I decided to buy second hand for cash if possible.

The bond on the house was fully paid off at least fifteen years ago but at the expense of a few foreign holidays and skiing trips. I now have no debt at all because I have, rather stupidly it now seems, decided to build up some reserves for my declining years.

My wife and I also decided to not have children because we weren’t convinced we could afford them. As it happens it was the right decision because we would definitely not have been able to afford them with school fees at R250000 a year.

This year the repo rate has dropped by 2.25% which means the taxed income that I rely on to live has shrunk by a third. My expenses certainly haven’t shrunk though. My very modest equity portfolio is but a shadow of its former self and, while I’m not pleading poverty, I am seriously considering when I would need to take my own life to avoid the shame I’d bring on the family by dying a pauper. Depending on how much the proposed wealth tax takes from me that is a calculation that will obviously need to be updated every few months.

The reason I accumulated all this “wealth” was to try and cushion myself as much as possible against the horrors of old age. Sure, I have medical aid (which is still allowed) but I may well have to chip in to keep my wife and I in moderate health or to hire the services of a carer. That’s why the money is sitting there waiting for such an emergency. It certainly isn’t about to be spent on a Jaguar I-Pace or a R10 000 a night game lodge.

The proposal is that anybody with a net worth of over R3.6 mln is fair game and should stump up 3% to the government. That net worth calculation would include your home and if you’ve been daft enough to pay it off then it’s the whole amount. This is obviously going to lead to some people having to sell their homes in a very bearish market and for considerably less than they paid for them.

Just to give you some idea of the buoyancy of the market there are currently 171 people trying to sell their homes on Val de Vie estate at a price of more than R4 million according to the Property 24 website. I doubt if there are 171 looking to buy though. That same picture is true of other estates throughout the country and, post Covid-19, the situation can only worsen as banks become very edgy about advancing loans against the security of property.

Most of my friends and acquaintances are continuing to pay staff who are unable to come to work and are either donating to or running feeding schemes in these desperate times. That would almost certainly have to end once the government decide how much to take from you and what to do with it.

And, as the ANC have demonstrated over the past 26 years, the chances of very much of the questionable R143 billion the authors reckon could be raised ever reaching the “pipple on the ground” is remote.

But let’s say that everything went according to plan and 32 000 000 poor people benefitted. That’s a one off payment of R4 468.75 per person. Hardly enough to build a prosperous new life and feed six kids with no other money coming on. I’ve got a feeling I know the sort of people who’ll be buying that new Jaguar I-Pace. Amandla. Viva capitalism viva.