LETTER: Localisation can up tax take
Job creation and higher tax opportunities make localisation a better proposition
Chris Hattingh of the Institute of Race Relations (IRR) must be a godsend to foreign factories and governments. His reference to the conflict in Ukraine as a boost to fiscal room is a very short-term consideration (“Localisation is costing SA”, March 6).
SA has for too long lived with insufficient tax revenue. This is partly due to the deliberate deindustrialisation of the world’s economies by Asian competitors, who now manufacture the bulk of the Earth’s consumption.
This was never sustainable. The queue of skilled labour outside every Builders Warehouse could be absorbed by localisation of manufacturing. The IRR must understand that it is costly, and not in SA’s interest, to renew, privatise or expand rail and port infrastructure.
Truthfully, the lower the supply of our raw materials the higher the pressure on better pricing, to our benefit. Why should we as a nation spend more to earn less? Further, the use of trucks is terribly inefficient, but thankfully involves local labour.
There is too little international demand for SA’s finished goods, so it would be necessary for us to embrace an export tax of about 30% on raw materials from here. This shift will slowly but eventually exceed the R5bn lost by Exarro that Hattingh mentioned.
One way or another we need those taxes. The IRR needs to get behind the scrum of our national interest.
Hitesh Naran, Johannesburg
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