Mahlatse Ramoroka recently completed a Masters in International Political Economy and Development from Fordham University.
January 24, 2019
By Mahlatse Ramoroka
Post-apartheid South Africa is a captivating case study of the ways in which economic inequality can be reproduced and preserved within a country’s social fabric, allowing it to continue to permeate its economy and power structures. The ever-worsening challenges of inequality and economic and social rights deprivations in South Africa are evidence of the persistent legacy of apartheid—the legally mandated system of racialized segregation and discrimination that ended twenty-five years ago.
Despite the democratic agenda of 1994, which explicitly promoted the advancement of economic and social rights and an inclusive society, the enjoyment of these rights is still elusive for millions of South Africans. The country remains the most economically unequal in the world when measured by various yardsticks, including the Gini coefficient (0.63) and Palma ratio (7.1), with the lives of many South Africans mired in economic inequality, social exclusion and human rights deprivations.
As the United Nations Committee on Economic, Social and Cultural Rights (CESCR) recently acknowledged with its recommendations following South Africa’s first review, the government’s adoption of austerity measures now perpetuates many of the same inequalities that apartheid upheld many years ago. Over the last few years, South Africa has enacted regressive tax changes and cuts in government expenditures in response to low GDP growth rates, shortfalls in revenue collection, mounting pressures from credit ratings agencies due to increasing debt level, and shortfalls in revenue collection. To make matters worse, austerity is being introduced in the midst of growing unemployment, inequality and poverty. Furthermore, these faulty “revenue generation” measures fail to comply with South Africa’s human rights obligations under the International Covenant on Economic, Social and Cultural Rights, which require that such spending cuts be temporary, necessary, transparent and non-discriminatory.
In particular, austerity creates a negative impact on the rights to education and healthcare. Under apartheid South Africa, ten times more money was allocated to white schools, as compared to black schools. Consequently, vast inequalities were embedded throughout the education system and within school infrastructures. Instead of remedying these historical inequalities, the recent expenditure cuts are exacerbating them, disproportionately impacting poorer schools with infrastructure backlogs located in predominantly black areas. In Kwa-Zulu Natal province, for example, funding for schools in the lowest income communities has been cut by 15% since 2015/16.
In response to these and similar concerns, the Center for Economic and Social Rights, along with partners Section 27, the Institute for Economic Justice and the Studies in Poverty and Inequality Institute, presented a parallel report and factsheet to the UN CESCR on the occasion of South Africa’s first review of its human rights obligations under the Covenant.
The research showed that declining personal income tax (PIT) and corporate income (CIT) rates, as well as under-taxed wealth and income via the capital gains tax and inheritance tax, are contributing substantially to reductions in resources necessary for sustaining rights, such as the right to education. In addition, other taxes such as the tax on inheritance (estate duty) and capital gains are below the OECD and BRICS norms.
Under-taxed wealth and income continue to erode public budgets and reinforce the gap between the rich and poor, as wealth continues to be concentrated in the hands of the few. Unfortunately, the social and economic challenges created by wealth and income inequality remain concentrated within the black population, with black women in particular carrying the biggest burden of low-paid care work and unpaid domestic work.
Corruption is an additional challenge affecting the government’s ability to use the maximum resources available as per its human rights obligations. According to the Department of Economic Development, corruption costs South Africa no less than R27 billion per year, diminishing public revenues and also eroding public trust. There are ways in which the state can intensify the fight against corruption, for example by strengthening investigative and regulatory mechanisms and actively ensuring adequate funding and staffing of anti-corruption institutions like the Public Protector, the SARS Special Investigating Unit, and the Directorate for Priority Crime Investigation (DPCI).
In November 2018, the CESCR issued the concluding observations and recommendations from its review of South Africa, drawing heavily on the points raised by CESR, IEJ and Section 27 in their submission. The recommendations make clear that the government must take specific steps to ensure that maximum available resources are generated, allocated and spent in accordance with and in furtherance of its human rights obligations. The recommendations to the government include:
• Rolling back the austerity measures that have been put in place, while increasing funding to social security, health and education;
• Reviewing the current tax regime and developing a more equitable tax policy that will increasingly contribute to income and wealth redistribution. For example, reevaluating the value-added tax and taking steps to combat illicit financial flows and tax evasion;
• Adopting a stronger human rights-based approach to fiscal policy making;
• Additional strategies for providing beneficial increases in allocations to address disparities in education and healthcare, as well as to improve accessibility to these basic services.
As CESR and its partners have identified and the CESCR has indicated, there are viable and equitable alternatives to austerity which can transform South Africa and help fulfill its initial constitutional promise of inclusivity to its most marginalized groups.
Photo courtesy of Johnny Miller/Unequal Scenes