Solidarity Tax: You can’t have your cake and eat it too

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The recent announcement that Namibia will introduce solidarity taxes has drawn much criticism from the public. This article aims to weigh in on the important aspects that Namibia as a nation should understand in order to embrace poverty eradication endeavours and solidarity tax as a catalyst for this goal.

Firstly, poverty, unemployment and income inequality are inter-woven subjects that emerged in the past. They may become destructive to democracy peace, stability, economic growth, sustainable development and the well-being of the people unless addressed and resolved today. In other words, the abovementioned three social ills not only affect the poor and unemployed, but also the rich and the nation in various proportions as we are related and connected to each other through various networks.

As I understood, there is no disagreement that the nation should address and resolve the abovementioned social ills without waiting for the golden-jubilee celebrations in 2040.

In the light of the above, President Dr Hage Geingob declared war against poverty and the nation has been assured of winning the war by 2025. This commitment and dedication of the Head of State should be embraced by all people in Namibia, because it is anutmost priority to the nation.

Any war cannot be won unless some sacrifices are made. Such sacrifices may be in the form of loss of lives, properties and other forms of destruction. The above applies to winning the war against poverty too, and therefore the proposed solidarity tax is a small sacrifice that can be made by some segments of the people who can afford some additional tax for a limited period.

In other words, when a war is won, there is no more further loss of life or destruction. The above reality should be understood by all who are opposed to the proposed solidarity tax.

Secondly, I observed that there are some misconceptions about the solidarity tax. I came across a statement that: “Taxing is not the right way to fight poverty, because you are fighting the symptoms and not the causes, which are unemployment and inequality in our society. Taking from A to give B will not address the issue”.

The above statement cannot be accepted, because it has been made by someone who merely wants to oppose the Solidarity Tax without foundation. As an example, unemployment is only one aspect of poverty dynamics. In other words, creating employment alone will not eradicate poverty, because the provision of healthcare, education, food security, power and water and road networks is required through government interventions in various ways.
Also, “taking from A to give B” is the face value rather than the expected impact of the proposed solidarity tax for poverty eradication. Another aspect is that emerges if one analyses objectively is that: “A” has accumulated wealth on the basis of the resource base of the country, including exploitation of the poor.

Even if we accept the face value of “taking from A to give B”, B does not take what he/she received out of the country. Due to the forward and backward linkages (i.e. interrelations among the economic activities), B helps the long term survival of A. In other words, if B is not there, A alone cannot survive in the long term. This is the fundamental truth or relation between “A” and “B” that cannot be ignored with respect to Solidarity Tax and poverty eradication.

Thirdly, the argument that “hand-outs create a dependency syndrome and laziness among the poor” is another misconception or lazily-articulated argument. At the beginning, the poor should be assisted somehow, but in the medium to long term, it is the provision or facilitation of the poor with opportunities, such as skills, knowledge, productive input and advice that the poor can contribute to economic growth and development.
The proposed Solidarity Tax will support and accommodate the above in the eradication of poverty. Through the Grameen Bank in Bangladesh, even beggars have become productive and self-employed and some have become outstanding entrepreneurs. In fact, poor people are an asset and through the provision of opportunities and assistance, we can capitalise them to contribute to economic growth and development without depending on others or the government.

Fourthly, it should be noted that solidarity tax is only a provisional measure of the government to meet some of the required expenditure for poverty eradication. The government has made concerted efforts to reduce expenditure by at least N$4.1 billion in the 2016/2017 through cuts to allocations for subsistence and travel allowance, furniture, vehicles and several other categories. These may emerge as savings towards poverty eradication. This means that the government has taken due care not to impose the full cost of poverty eradication through solidarity tax.

Fifthly, it should be noted that perpetual poverty, unemployment and income inequality are the breeding grounds for social unrest and in this respect there is substantial evidence from the world, including Sri Lanka in the 1970s, and 1980s. Destruction caused due to perpetual poverty, unemployment and income inequality cannot be measured in terms of money or tax we pay today.

I do not think that the majority of people have understood the abovementioned truth. If poverty is not eradicated as planned, not only the present generation, but also many generations in the future will pay for the cost of the consequences of poverty – with compound interest.

Sixthly, I know well that a beggar does not want to cure his wound, because it may be the source of his survival. In some countries, leaders do not want to address and resolve the country’s problem, because they use them for their survival.

* Dr Asoka Seneviratne is the director of programmes and institutional development at the International University of Management (IUM), Windhoek..

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