Inequality in South Africa keeps on growing, yet corporate tax keeps falling. “In 1993, the corporate tax rate was 40% today it is 27%,” noted Dale McKinley, co-founder of the Unpaid Benefits Campaign, adding that it is no wonder the poor remain in dire financial straits while the rich get richer.

Corporate tax is a tax imposed on the profits of companies. It is a key source of government revenue meant to fund public services and infrastructure.

For decades, South Africa’s corporate giants have reaped enormous profits from the nation’s abundant natural resources, yet these gains have not translated into prosperity for the majority of our citizens. The stark reality is that while mining companies amass millions annually, local communities bear the brunt of environmental degradation and economic disenfranchisement.  

Last night, The Big Debate dived into these pressing issues and attempted to understand why South African wealth and inequality have become so intertwined. The conversation revolved around the country’s economic disparities, highlighting stark contrasts between corporate wealth and widespread poverty at home.

“If you go to any mining area in the country, the roads are black with tar, children are suffering from kidney stones from as young as 10, peoples’ water is being poisoned, yet these companies are making millions every year,” said Andile Zulu of the Alternative Information and Development Centre. 

Many miners and residents in mining communities blame greedy mining houses. “Big labour unions, big government, and big business often work together to exploit the system in their favour,” said Hermann Pretorius, head of strategic communications at the Institute of Race Relations. 

McKinley pointedly criticised the government’s failure to hold big business accountable. “When we don’t have politicians that have the political will to act against big business, this is what we get,” he said. The unfortunate truth; governmental policies have often prioritised profit over people.

One such policy, Broad-Based Black Economic Empowerment (B-BBEE), initially meant to address past economic imbalances by promoting black ownership and participation in the economy, has been criticised for benefiting only a select few rather than the broader black population. “BEE sounds like it’s supposed to empower black ordinary South Africans, but if you look at it it’s only empowering a small black elite at the top,” said Pretorius. On top of the poorly distributed benefit of this policy for black South Africans, “white business financed BEE and they are still exploiting black people to this day,” he added.

McKinley criticised the lack of political will to hold big business accountable, emphasising that “when we don’t have politicians that have the political will to act against big business, this is what we get”.

Isobel Frye, director at the Studies in Poverty and Inequality Institute, further critiqued the state’s role, arguing, “People say that South Africa is a social democracy; we are not. There is no point in which the state provides decent quality public goods.” 

Since the end of apartheid, the gap between the wealthy and the poor has only widened to the extent that South Africa now has the worst income inequality in the world. One reason for the growing gap is the outflow of resources and their profits from the country. “Moving money out of the country is a sustained problem; the systems put in place to control the inflow and outflow of money was disposed of in 1994,” said Liso Mdutyana, a researcher at the Institute for Economic Justice.

How, then, do we narrow the divide between rich and poor? 

Frye argued that systemic reforms are needed to address these inequalities, advocating for a basic income grant funded by increased corporate taxation. “The real issue is our gross unemployment in the country,” she emphasised, highlighting the urgent need for redistributive measures to level out the wealth disparities.

Napoleon Webster, a prominent land activist and former Marikana miner called for a fundamental shift in economic governance. “The workers need to own and control their own workplace, and we need to use the power of the government to tax the rich because they will never care.” This approach, he contends, is crucial to ensuring that economic gains are equitably distributed among all South Africans.

The path forward demands a reevaluation of South Africa’s economic priorities and policies. By holding corporations accountable through increased taxation and empowering local communities through ownership and control, the nation can begin to bridge the deep-seated wealth gap that threatens our social fabric.

As Zulu poignantly said, “If the rich have been winning since 1996, the rest of us have been losing. We have to make the government more scared of us than they are scared of disappointing the private sector.”

The Big Debate is a South African current affairs show airing for its 12th season. This town hall debate show has been on air for 15 years, with this season coinciding with the national elections. Explain is thrilled to be partnering with The Big Debate to cover the series as it unpacks these issues.

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