For those who’ve been wondering, and or comparing an increase in Value Added Tax to the recent increase by the new administration and referring to the “stripping the naked man” metaphor by the current president, this is the difference. Please remember the VAT is an indiscriminate type of tax on all goods and services, unless selected goods and services are exempted. This means every person pays it, upon procurement of goods and services regardless of their status and they pay it equally. With the recent increment, the higher bracket of income earners will pay. This is called, progressive taxation. It is a discriminatory tax, that obtains from the rich and exempts the poor, with the hope for improvement of conditions for the latter. It has philosophical foundation on the concept of social justice as argued by John Rawls.
A great proponent of this sort of political economy, in his book “A theory of Justice” published in 1970 argues that greater good can be achieved from pursuing this sort of taxation. He starts by explaining the origins of inequality and suggests that people are born into different situations, mainly due to their familial descents. He imagines, a position, the original position, where man is devoid of bias and other contingent privileges that set him different from the rest. He calls it the ‘position of equality’, where man uses no calculus to measure another man’s worth, because they basically are equal.
Now, he accepts that that very position is abstract, as man will always have hedonistic interests, will prevail over the other and set to reaffirm his dominance if he is dominant. So to bring about equality, he discusses two principles, one being of equality where every man is observed being equal. He says in here, that, man is born with ‘inviolability founded on justice!’ That is, society should not assume the position of imposing judgement that places individual rights at jeopardy when in pursuit of collective rights. That is, man should as free as possible to achieve personal goals.
Quickly, he compliments that position with the second principle – the difference principle – where he argues that inequalities are actually permissible in society. He asserts that condition for accepting inequality should be when it brings about greater gain for the people on the floor of the political economy. For example, a tax the rich policy, if implemented in this light, is an efficient way of achieving redistribution.
Thus, if the resources are concentrated in a few rich people, taxing them more and utilizing the money in improving conditions for the poor will build a more socially just society. This is an alternative to the Herbert Hoover’s ‘trickle down’ economics that insinuate that lowering of taxation for corporate men yields greater impetus in the improvement of conditions for the poor.
Those browsing for a left leaning sentiment from the budget, the increment of old age, provision of sanitary pads and birth allowances for targeted individuals is an immediate response. It’s a great leap into securing the care economy. It is not only commendable but progressive as the state has just assumed a huge chunk of black tax. It will allow households to rearrange their food baskets without being hampered by the need to carry some funds back home. Furthermore, it is stimulus in nature, as it will induce and stimulate demand.
* Social Dialogue Specialist at Botswana Federation of Public, Private & Parastatal Sector Unions *Former Lecturer – Political and Administrative Studies at University of Botswana_Official.