Special Hearings — Business Hearings — 1997-11-12

MR VAN WYK: In start replying the - the reason that I didn't come to it in my oral presentation is that I ran out of time and also assumed that you'd ask me a question.
 If I could come to this, I think we started off with the (indistinct) that I think it's only realistic to expect that there will be recommendations regarding Reparations coming from this Commission.  
 We first of all said, well, this has to fit in with the macro-economic strategies.  We cannot have this working against other strategies which might be against the interest of our country.  So, one must try and slot it in there.
 Secondly, that if you're going to have this;  where is the money going to come from?  The one possibility obviously would be donations flowing to the President's fund etcetera, but it's probably something that you're going to have a difficulty getting donations of the order of magnitude that will actually be adequate for that purpose.
 Which then makes you ask where else do you have Government cuttings budget.  Do we have less clinics being built?  Do we have less schools, less teachers?  It sort of seems that that would created more tensions in our society than it would resolve problems.
 So that is something.  You can't just cut budgets.  Then you say, but now right, if we don't cut budgets, do we raise taxes?  Do you raise VAT?  You know, I think COSATU would be very very annoyed at that.
 If you were to raise special income tax levy like we had after the last election, a lot of people would say, but you know, I'm the wrong guy. I supported sanctions or I sort of went out of the country and only came back after 1994.  
 You would once again - and I think that also there you would have people who said, but if I pay that levy now I've got nothing to do with it.
 I think it's - one must try to win the hearts and minds of people to be committed to be involved to say this is our country and we're going to build a future.
 Professor Terblanche made a recommendation regarding a wealth tax.  Well, we already have a wealth tax.  I think if you think in terms of taxation, you can only tax a few things.
 Let's assume a chap has money in the bank.  He's got his money in the bank.  He gets interest.  You can tax the money.  You can say I want a percentage of that.  You can say when he gets interest on that, that's income tax.  I take a slice of your income and then after you've paid that you have something left;  if you spend it, we have a value added tax.
 If you save it and you put it back in the bank, well I take a part of the capital again.  What we have is a capital tax, a wealth tax that is levied on these ordinations, but basically the main theme is (indistinct) and the basic rate is 25 percent.
 So you're saying that at the end of your life time you actually have to pay something, but internationally wealth taxes are very complex.  People avoid them, because capital that becomes mobile, especially if you relax exchange controls and all kinds of other things.
 The second thing is that it is administrative.  It is an administrative burden for an administration that has difficulty to collect the main taxes that we have in South Africa, being the consumption tax and the income tax.
 Thirdly, it is a further burden on savings.  It is a (indistinct) for people to save rather than consume and we as a country, we have a lack of savings.  So there are many arguments.  I think the main thing is it is too complex.  It is going to send the wrong type of signal and we already have a tax.
 If you say once in a life time they take 25 percent or they take half a percent a year;  it's just slicing it in a different way, but it's the same tax base that you're really going for.  Of course the incredible complexity with valuation, because all wealth enlisted shares.  You have unlisted shares, you have intellectual property, you have a host of huge problems that goes with it.
 I think it is an unproductive use of people's energy.  I'd rather have the wealthy people using that time and energy being constructive and productive, rather than sort of looking at things of that nature.
 So, I think that from that angle, taxation is not the way to look at it.  Then we came to this idea, but what about SASRIA?  SASRIA is hanging in a legal limbo.  It was created in the Apartheid era, because there was no re-insurance available in the international markets to an acceptable extend.
 So they said;  let us create this new animal.  We get all the premiums going into it and Government was the ultimate re-insurer.  Government never paid a penny in terms of that, but Government received a penny for giving that service.
 People paid their premiums.  It's like a person insuring his house against fire.  At the end of the year the house didn't burn down and he goes and say I want my premium back, you know.  There was no contract that he could get - that the policy holder could get anything back.  
 Government also didn't have somebody to say if there's anything left it comes to me.  It was in a section 21 company where it says that you could only use it for that purpose.  And the purpose is to ensure against political risk, against political unrest.
 That risk has diminished dramatically.  One ask yourself the question how it - if you had a house;  if my house burns down, they say this is perfect.  We can pay for that, but now, let's use some of the money to make a fire break;  to avoid the house burning.
 If we could channel some of those funds in a way that reduces the risk of such damaged being caused in future in our society.  Maybe that is so close to the purpose for which this fund was created that it is a logical extension.
 So from a moral viewpoint, because Government (a) was the re-insurer without any compensation and (b) it enjoyed tax breaks for the first number of years of its existence.  I think that society at large being the Government has a moral plague, at least to a portion of what is there.
 The insurance industry and other people have put in various claims saying that it should be used to subsidise premiums of various natures, etcetera.  I think that the strongest claim can be made for the type of activity that we're seeing coming from this Commission, looking at Reparations to put medicine on the wounds of the past.
 Let us - money cannot adequately compensate for what has been done, but to the extend that money can help people there and can do good, I think that that is an appropriate thing.
 But the focus one would like to see for the future, is to unlock the human potential of this country.  To take the human capital, the human God-given talents of people and upgrade it so that they can become competitive in the international environment.
 In other words, give them appropriate skills.  Give them appropriate training so that they can be the employers or the employees, whatever, but in such a way that they really utilise those talents to the full.
 I think that is where the focus should be and if one could, having sort of addressed the wounds of the past, focus on the future and give a visions and a hope for the future.  There I believe it is very important and I think one can easily mobilise society at large to say let us take hands and do this thing.
 Let us work with upliftment.  I think that is where you'll get a lot of generosity and a lot of people not only in South Africa, but from outside South Africa to say I'd like to be associated with that.  I'd like to build together for the future.

CHAIRPERSON: Thank you, Mr Van Wyk.  Hindoe?