The new BEE tax will increase the cost of living for all South Africans. Sign the IRR’s memorandum to oppose this unconstitutional and discriminatory BEE tax policy and support the IRR’s alternative proposal.
I, the undersigned, hereby oppose the implementation of the so-called Transformation Fund for the following reasons:
The Fund conflicts with at least four key clauses of the Constitution.
It contravenes Sections 1 and 9 by classifying people into apartheid-era racial categories and implementing discriminatory, race-based practices that favour some citizens while excluding others. BEE benefits only a small and often politically connected black elite.
Section 213 of the Constitution states that “all money received by the national government must be paid into… [the] National Revenue Fund, except money reasonably excluded by an Act of Parliament”. Yet the minister seeks to direct a R100 billion into the National Empowerment Fund without a statute authorising this or demonstrating that it is “reasonable”.
Furthermore, Section 217 of the Constitution mandates that all public procurement must be “competitive and cost-effective”. Officials awarding public tenders must prioritise “value-for-money” over BEE considerations, as Judge Raymond Zondo emphasised in his report on state corruption. However, Mr. Tau wants to exclude businesses that fail to contribute to the Fund from all state tenders, regardless of the harm this would cause to competition and cost-effectiveness.
The Transformation Fund is effectively a new tax on companies, whereby the government will impose an additional 3% levy on company profits. This cost will inevitably be passed on to consumers, disproportionately affecting the poor and economically marginalised, who will, in essence, bear the brunt of financing the government’s new BEE tax.
Current race-based BEE policies have already caused significant harm to the economy. By using race to determine its beneficiaries, BEE enables a black political elite to exploit its privileges while the poor fall further into destitution. The Transformation Fund proposal must be scrapped, along with all other race-based laws.
This proposal will also deter investment, stifle economic growth, and destroy jobs, which will severely harm the vast majority of poor black South Africans. Black Economic Empowerment is one of the main drivers of worsening inequality within the black population, as well as rising unemployment, which is most acute among black South Africans. BEE harms those it purports to help.
Economic Empowerment for the Disadvantaged (EED) is the IRR’s practical alternative to BEE. EED offers a non-racial approach to assisting the disadvantaged. Like the social grants system, it would use a means test to identify those most in need. EED would empower grassroots communities by providing the poor with tax-funded vouchers for schooling, healthcare, and housing. This system would reallocate revenue, often wasted or mismanaged by bureaucrats, directly to families, empowering them to use their vouchers for better schooling, healthcare, and housing in a competitive market.
