Will Gordhan encourage the trafficking of South Africa’s unemployed to Mozambique?

The best chance for South Africa’s 8.5 million jobless is a single bus ticket to Maputo. Work prospects there are unlimited because access to fertile land is free. And GDP growth has held at 8% pa since 1996 (2015 IMF Country Report).

Like Hong Kong, the state owns the entire 80m hectares of Mozambique, 3.5ha per family. Users own whatever they grow, rear, build, service or make with their brawn and brain under “use-right” contracts. These are perpetual quitrent tenures, paying pepper-corn rents.

This has finally ended Mozambique’s long-running proletarian, landless and inhumane tradition. (Inhumane because we are all land animals and when shut-out invariably face destitution and get disturbed. That is the daily consequence facing millions of South Africa’s suburban children catching bullets not butterflies.)

One drawback is that foreigners cannot be registered for five years. However, there is nothing to stop South Africans from leasing a hectare or two from a Mozambiquan family and growing food for them in return. One hour of gardening a day will yield the three tons of food needed to feed a family of four for a year.

Migrants can then concentrate on their hectares, mankind’s unique treasure trove and fresh-air factory floor. Each year a sow will bear 20 piglets, a doe 840 rabbits and an arable hectare will feed 20 families using low inputs.

To be successful, traffickers must be trained hustlers in convincing their customers how any able-bodied person can become a millionaire in Mozambique in a few years. Examples abound; in Tete, the United Leaf Company (USA) has transformed a desperately poor, war-torn part of northern Mozambique into rich farmland by training more than forty thousand black Mozambicans to grow tobacco and other crops for export. These are independent out-growers. The company supplies agricultural inputs and technical back-up.” This is what Douglas Roberts, a Sunday Telegraph feature writer reported from in 2009. He ended “peasants who had recently lived in mud huts, dependent on food hand-outs from the West, were now building houses, driving four-by-fours and sending their children to school.”

This is internationally commonplace for small holdings. The best grapes and the finest oranges in the world are produced on single hectare farms in Bordeaux and Majorca.

However, Mozambique could do better if it increased the pepper corn rents to the point where “every user of land makes an annual payment to government equal to the current rental value of the land that he or she prevents others from using.” This was the recommendation which Nobel Economics prize winners made to President Gorbachev in 1990 when Russia was privatising its economy.

In depending on unearned land rents rather than hard-earned income taxes and vat Mozambique is being transformed into a tax-haven, like Hong Kong. The latter’s citizens are the second wealthiest in the world, barring the tax-evasion havens and oil rich regimes. So its a system works.

And whilst it is counter-intuitive to tax the fruits of citizens hard-earned work and wealth, the alternative to one of life’s alleged certainties, is to capture the unearned rents, the common-wealth. These are revenues which bubble up from the land not through any effort of landowners but because of nature’s endowment as well as state infrastructure, services, governance, secure titles and population growth.

So should one buy a rusty bus and start trafficking South African peasants to Mozambique? And to goad it on will Mr Gordhan allow tax rebates to traffickers and continue to pay child allowances to our refugees?

The problem is this begs the question why does South Africa tax work and wealth and not land? That is more likely to happen than meeting an encyclopedia salesman today. It has been flatly rejected by the armies of tax lawyers, accountants and fellow travelers in National Treasury, SARS, the Katz Commission, the National Development Plan and the Davis Tax Committee. And it speaks in forked tongues that in spite of the conflicts of interest, none recused themselves.

Their mistake verges on treason. For, contrary to their professional tenets, the supply of land and man-made goods do not both shrink when taxed. In fact, land rents can be taxed at 100% without the earth getting smaller. But if income taxes reach 25%, man-made wealth will walk, distorting the economy. This fiscal conspiracy diminishes GDP by some 25%pa, according to those who make the calculations. They are known as dead-weight taxes and make President Zuma’s interventions look like small beer.

According to Frost and Sullivan there are tens of millions of unused hectares in South Africa, and countless unused urban plots. Yet the state’s Constitutional obligations to the landless are unequivocal as section 25.5: – the state must take reasonable legislative and other measures, within its available resources, to foster conditions which enable citizens to gain access to land on an equitable basis”.

There they gather dust. Whilst South African employers and employees are denied a leisurely tax-haven and its promise of low unemployment, high GDP growth, stables, SUVs, cricket on Wednesdays and surfing at the weekends, the owners of unused land, trade union leaders, employers who mistreat their work force and tax professionals can hold their breath.

Peter Meakin
Registered Professional Valuer
Patron of SACPRIF and Chairman, Management Committee

Image courtesy of dai.com


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