Letters to the editor: December 5 to 11 2014

Authors short on skills ideas

Siphelo Ngcwangu and David Balwanz must be commended for raising in the open media the conceptual problems that bedevil skills issues in South African practice and the design of policies (How can we meet our skills needs if we don’t know what they are?).

For years policymakers have appeared oblivious to the weakness of our national skills strategy in the face of major information problems that inhibit investment in the production of skills that are in demand. The authors point to some of the confused and confusing conceptualisation that undermines the skill strategies of every country, and the problems unique to South Africa.

But these writers unfortunately go on to introduce new obfuscation that one suspects may be ideologically driven, as they have only negative remarks to make about the concept of “human capital”.

In the process they have nothing concrete to suggest to policymakers in the various departments of the state charged with education and skills production. One example must suffice.

The authors write: “A more inclusive approach to determining skills shortages would be to identify democratically social development priorities and educational interests as well as citizens’ ‘nonmarketable’ activities and priorities. Such an activity could result in a different list of scarce skills.”

Indeed it would so result, but only in cloud-cuckoo-land. It seems these authors have never dirtied their hands with the collection of real world data on labour? Collecting such information with its ambitious labelling here is extremely difficult and expensive.

Witness the recent Scottish referendum last September on the choice for national independence or not, in which there was only one relatively simple, but nevertheless contentious, question.

With that in mind, to go on to suggest asking the South African population to identify the skills they would like to see more of would be a highly daunting task, containing many different questions, subclauses and definitions of the key terms carefully and unambiguously deployed.

It cannot be done, and to leave these comments and suggestions about skills practices and policies at the abstract and ideological level demonstrated in this article is to throw in the towel before the debate has even started. – Sean Archer, Rondebosch

Offshore tax havens bleed wages

Thanks for reference to the Alternative Information and Development Centre (AIDC) report, the Bermuda Connection, in the Mail & Guardian article Clampdown on tax avoidance.

In the report we estimated that Lonmin, as an international company, has shifted more than R400-million from its South African subsidiary, Western Platinum, every year, using two transfer-pricing arrangements.

But the report does not claim that “Lonmin avoided paying R400-million in taxes”, as the Mail & Guardian writes. It says the company is transferring well over R400-million out of South Africa every year – an amount that, at the 28% corporate tax rate, would carry a tax liability of about R110-million.

It is a key idea in the report, however, that such aggressive tax planning has a much larger potential impact on wages for ordinary employees in South Africa than it has on tax revenues. There is a huge, negative “multiplier effect” involved when large amounts are shifted abroad to avoid the smaller share to be paid in corporate income tax.

The larger part of the transfer that lowers corporate tax is removed from the wage bargaining table, or from dividends to black economic empowerment partners, or from local investments; it also takes funds away from social labour plans, if we are speaking about mining companies.

The funds of South African subsidiaries are depleted by invoices from parent companies or their outfits in tax havens, so the subsidiaries, who hire the workers and pay their wages, have less money.

Such tax planning is a support pillar of the low-wage regime. It destabilises the labour market. It should be a part of the R12 500 debate.

We hope Judge Dennis Davis’s tax commission can take such a holistic view on tax evasion and tax avoidance into consideration. – Dick Forslund, senior economist, AIDC

Right to work is a core value of the progressive left

Richard Calland writes that the progressive left fails to offer an economic policy alternative (Act fast to save South Africa’s falling stock). He perpetuates a myth.

Briefly, the non-Stalinist left believes in the right to work, which, in the context of the ecological crisis, would be realised through job-sharing in a 20-hour work week. We would, for example, co-organise with metalworkers to transfer their skills into green jobs.

Furthermore, the expansion of the public sector is not only necessary for jobs that are essential to the functioning of society but is also the proper focus because it does not contribute to global warming.

The left also stands for a minimum wage of R6 000 and a basic income grant of R12 500 a month.

Finally, the left believes that multinationals must pay an 85% tax rate, except the fossil fuel companies, which should be placed under popular control for the sake of the beautiful blue planet. – Shaun Whittaker, Windhoek

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