“Black Tax” – where young black professionals are expected to support their families financially – may be regarded as a boon or a burden.
Ntombizamasala Hlophe, Strategy Director at Yellowwood with vast experience in marketing across Africa, says Black Tax which refers to the obligations of first-in-the-family college graduates, professionals, or others who “make it” to assist their family members, is both fit and fatalistic in equal measure.
“Black Tax is fit because it is a generational affirmation of the spirit of Ubuntu when you can pay forward the support received within the same lifetime; and yet it has become fatalistic in many ways as it has been attributed with knocking down the chances of building generational wealth.”
While it is a common practice in many cultures to assist family members, with black Africans it has become an increasingly burdensome obligation on the income earner to look after a widening list of direct and indirect dependents.
“It is the harsh reality about being black in South Africa that each generation is swallowed into the worsening consequences of a sluggish economy to do the heavy lifting of mitigating the effects at a social level. The effect of this pressure will no doubt be fatal to the fitness of Ubuntu,” she said.
The time is ripe, Hlope believes, to advocate reforms to black tax that preserve the spirit of Ubuntu and give the current income earning generations a fighting chance at building wealth.
She said today’s Black Tax model is largely a cash transfer system, with an increasingly complex network of dependents and extending list of needs for arguably diminishing base of income.
“Our answer to this pressure may lie in the holy grail of wealth creation, long-term thinking beyond cash. If we accept that ultimately Black Tax at its core is investing with a long-term view, then that same model has the potential to reform Black Tax so that it is less taxing and also provides the next generation with the foundation they need to succeed.
“If we reframed the definition of the assets available from the income earner beyond just cash to the broader financial participation that includes property assets, access to finance, credit behaviour, access to medical insurance; the resources available to fund Black Tax could be significantly expanded.
“Consider the effect of reframing the homeownership to a scenario where a black professional instead of handing out monthly payments to the family back home, invests in a property and uses the rental income to pay for the lack of a better word his or her share of the Black Tax. What used to be an out-of-pocket expense is now essentially an investment towards an income generating asset,” Hlope said.
MANCOSA private higher education institution will host a webinar on Thursday 19 August at 11am where Ntombizamasala Hlophe will discuss an alternative model to the current Black Tax reality. This is the link to join: https://mancosa.zoom.us/s/94457887782
The new socio-financial model will champion “greater familial financial inclusion” and could be the reform that Black Tax needs.
“A household with full access to the financial system through the collective power of all the family members – affordable banking, debt consolidation, insurance against key risks, access to credit and a savings strategy stands the best chance to create wealth.
“While many families take these services for granted, for black families gaining access to the whole puzzle is the best pathway to success,” said Hlope.
Partnership Programmes Could Be Key To Business Growth During Tough Economic Times
To Survive Load Shedding Your Businesses May Need To Reconsider Work Flexibility
More Needs To Be Done To Support Female Entrepreneurship In South Africa
Blockchain Innovators Flock To Joburg
Key Factors To Consider In The Retrenchment Of Employees
Coastal Property Is Still Booming According To Estate Agents
Come Meet The Game Changers
How Tech Education Is A Driver Of Equality For Both Businesses And Consumers
Africa’s WhatsApp Economy Is On The Rise
Alstom Has Supported Over 9,000 Jobs In South Africa, According To EY Report
Research Shows Debt Counselling Delivers Credit-Score Benefits
Thinking Of Listing Your Home On Airbnb? Here’s What You Need To Know