The EFF has rejected business mogul Patrice Motsepe’s proposal that South African corporates be given tax breaks to make the country a competitive investment destination globally.
The EFF said granting corporate tax breaks would only benefit white South Africans because they would not lead to attracting more investment, “but more profit [being] shifted to tax havens in an economic climate of investment strike and high-level mechanism”.
Motsepe had said for South Africa to be a competitive investment destination globally, the country would have to introduce tax holidays, tax incentives and tax dispensations similar to ones given to the mining industry in the past.
The Mail & Guardian reported the mogul was speaking at the Brazil, China, Russia, South Africa (Brics) Business Forum last week.
The EFF said Motsepe’s proposal was driven by greed “and meaningless accumulation of the benefit of the few at the expense of workers and poor South Africans”.
The red berets said Motsepe’s suggestion was senseless because National Treasury had lowered corporate taxes from 56% of distributed profits in 1994 to 43% in 1999 and 38% in 2005, adding corporate taxes at present had been slashed by almost half since 1994.
“Corporate tax has consistently been reduced at the benefit of untransformed and racist corporates, and its contribution to overall tax income collected by Sars [South African Revenue Services] is just 18% of R1.2 trillion total taxes collected in 2017,” the party said in a statement.
The EFF further said its rejection of Motsepe’s proposal for corporate tax breaks was qualified by the fact that increases in personal income tax and in petrol and food prices occurred annually and that these contributed the most to the total taxes collected by the country.
“What is even more repulsive by Motsepe’s proposal is that the mining sector that made him billions, despite being the pillar of South Africa’s economy for more than 300 years, has been a destruction to the lives of black Africans. Black Africans were dispossessed of their land, forced to work in the mines and left with diseases to die in rural areas while whites and few blacks like Motsepe created immense wealth,” the EFF said.
The party added what was even more abhorrent was that South Africa’s mining industry contributed only 12% to corporate income and just under 3% of R1.2-trillion total taxes collected in 2017.
“Furthermore, corporate South Africa is amongst the most corrupt in the world, and is involved in illicit financial flows, base erosion and profiting shifting robbing millions of South Africans decent education, housing, social grants and other services,” the EFF said.
The party cautioned Motsepe to not use his closeness to President Cyril Ramaphosa and the finance ministry to advance his proposal.
The organisation is of the view that corporate tax should be increased, with Sars seeking to curb illicit financial flows, base erosion and profit shifting as a way of address the high levels of inequality in the country.