NATHANIEL LEE | Turn black tax from a 'bane to a boon' so that it's not a burden

Is black tax a boon or bane of black society, especially when considering the country’s worsening economic outlook? The term black tax refers to financial support that those black professionals who are considered to have “made it” are obliged to provide for their families on a continuous basis outside their own living expenses.

This practice is subconsciously some kind of payback for sacrifices made by previous generations or family members. It happens that education is the primary area where black tax money flows. This happens when one member of the family after having graduated from school and started working, has to take care of the educational needs of his or her younger siblings.

In addition, they take care of other needs such as food, clothing and healthcare. In the end these responsibilities become unbearable and unsustainable. It has to be pointed out that the responsibility of educating children in a family is that of the parents and not that of older siblings.

When parents support the education of their children, it should be out of a genuine sense of obligation and not some form of investment for the future where their children will be expected to take care of them. While it is admirable for children to want to help their parents, it should not be financially draining, thus impacting negatively on their financial aspirations.

Education is a primary equaliser to address inequality but it does not guarantee employment. When the expected “return on the investment” does not materialise, the cycle of dependence continues. With unemployment at 45%, high inflation, rising interest rates and the lingering effects of the Covid pandemic, black tax can exacerbate an already desperate situation and scupper prospects of the creation of black generational wealth.

As an offshoot of ubuntu, black tax can be commended for seeking to help others out of poverty, but it is not an effective mechanism for creating generational wealth. The burden of having to share diminishes the capacity of young people to invest, save towards retirement or build capital to start businesses. Such financial support becomes incapacitating and can certainly not qualify as cheerful giving.

Sometimes graduates are sent on guilt trips through phrases such as “remember where you come from” to pressure them to provide and even entangle themselves in debt under duress. The problem with black tax is that it does not lead to an acquisition of productive assets.

According to Farzana Botha, manager at Santam Savings, black tax can help unite families through honest conversations and shared goals. It is crucial that those who take responsibility for families should empower themselves financially to be able to navigate black tax successfully.

Firstly, a caretaker has to know his or her limits and stick to them. This means not trying to live beyond their means as this may lead to them not being able to help themselves or their families. As the saying goes, “cut your coat according to your cloth”. There is a need for honesty about what one can or cannot afford. This should also extend to parents in terms of family planning to obviate the need for children to take over the responsibilities of their parents.

It is also important to remember that money is not the only resource to share. Caretakers can empower their families through financial education on concepts such as budgeting, saving and living within their means. It is important for them to clarify their financial position to manage expectations on how far they are able to assist.

There is a need for tough and honest family conversations around money. This entails removing the stigma around such conversations. The discussions should be geared towards empowering the dependents and ensuring that they ultimately take responsibility for their own financial welfare. It is important for caretakers to look after themselves and not be swamped by the black tax wave.

Botha gives this sage advice, “While empathy and support are important and necessary human characteristics, be careful of sacrificing your mental, physical and financial health on the altar of family responsibility. Remember that, without you, others may find themselves in greater difficulty and unconstrained support may not be constructive.

"Make sure all aspects of your mental, physical, and financial health are in good shape. This may also ensure that your obligation feels less like a burden and more like an investment.

“With proper financial education and management, it is possible to flip the script on black tax and turn it from a bane to a boon to create generational wealth for the black nation."