the g spot
THYS DU TOIT: SA’s new heroes will be the job creators
Coronation co-founder Thys du Toit has urged the state to consider radical steps to boost SA’s burnt-out economy. We asked him if he had any confidence that the government was listening
In a YouTube clip, Coronation co-founder and chair of Rootstock Investment Management Thys du Toit has urged the state to consider radical steps to boost SA’s burnt-out economy as it grapples with Covid-19. Suggestions include cutting taxes, ditching expropriation without compensation and, critically, creating an environment where entrepreneurs can blossom. We asked him if he had any confidence that the government was listening.
TdT: My YouTube clip really was aimed at making suggestions how we can get out of the fiscal hole that we will find ourselves in once we’ve gone through this pandemic. Government revenue will be under severe pressure; we already have an economy that is struggling, it will now be decimated. It is interesting, the criticism I have received from the government, where they see [my message] as political. It’s not political at all: it really is acknowledging that we have a fiscal deficit issue and we will have to do something to generate economic growth. The signals from the government thus far have been that there is ignorance towards the fact that ultimately we need to generate growth so that tax revenues can go up and we must do whatever is necessary to facilitate that.
It’s sad that at this time, when we need all hands on deck to come up with suggestions and ideas as to how we can get the economy going, there is almost a laager mentality of "let’s all sing from the same hymn book", rather than looking wider than narrow political interests.
Do you not think it’s because there is a fundamental trust deficit between the ANC and establishment business, born from SA’s racial dynamics, that hasn’t narrowed?
TdT: Unfortunately, that’s the issue that we need to address, to try and do away with that trust deficit.
I’m acutely aware of the fact that I’m a privileged white in my 60s and am now chirping from the sidelines. The reality is that we are interlinked, joined at the hip. We are all South Africans and we need to collectively address this issue. A friend of mine recently suggested that we need to find new heroes, and acknowledge those new heroes on the basis that they create jobs.
So when we have a medals parade in three to five years’ time, let’s award bronze medals to those who created 100 jobs, silver medals to those who created 1,000, gold to those who created 10,000, et cetera. It’s difficult to think how we can remedy a trust deficit, because political parties will always exploit that. But my hope is: we are in the dwang as a country, how do we get out of it, and let us acknowledge those who contribute to doing just that.
People who will be the job creators will be those heroes.
I know that, again, I will be criticised for just this statement, but we need to move forward.
The National Treasury has warned that tax receipts could fall 32% this year, but one of your suggestions is to cut the company tax rate to 20%. Would that not compound a revenue shortfall?
TdT: If we just take Mauritius, for instance, it is now the financial services hub of Africa and it has been very progressive in terms of low company taxes. So initially there’s a sharp shock, but we are going to have so many shocks, let’s shock it further but then take the right policy decisions to attract investment going forward.
The tax rate could be 20% or 15% or 12.5% — but let’s do away with the concept of [taxing] more to get more revenue tomorrow, rather than taxing less to get more revenue in the long term.
The Treasury is awake to this issue and in this year’s budget warned that SA was losing its competitiveness. At the same time, it is mulling a wealth tax … could both work?
TdT: Coming back to that trust deficit: I think we would be all for it if there was high trust in the fiscal management and the ability to deploy wealth taxes in a constructive way without big corruption leakages.
In other words, a bigger investment to get the economy going — but we cannot do so if people who have stolen and robbed us blind continue to do so without being prosecuted. Again, those two things need to go hand in hand.
Let’s demonstrate that we won’t tolerate theft and then say: all right, we need everyone to put their hands in their pockets and actually make a contribution. Then I think there’d be huge willingness to do so.
It’s been horrifying to see how SA Inc shares have been beaten down — but do you think their listed prices are fair, given how grim our situation is?
TdT: While SA assets look as if they are priced at bargain-basement levels, we are on the precipice — an inflection point where it can go reasonably well or very badly.
I was horrified to learn that a faction of the ANC went to Venezuela on a fact-finding and study tour. How ridiculous can you be? Visit successful countries, not basket cases.
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