‘Black tax’ leaving people in the red

2017-05-30 13:00

The burden (some) black people experience because of having to shoulder responsibility of supporting their families. This tends to happen once the person(s) finish schooling and/or when they start working. The expectation is that they have to ‘pay it forward’ by assisting their parents, siblings or cousins to also rise up. Although referred to as black tax, this is something which affects all people regardless of race. For the purposes of this piece, we will stick to the term as is.

Given this is a touchy subject I will preempt my position: I am an advocate for building other people up - hence my chosen line of work which I focused on socio-economic development. My purpose in life is to help people become better from when we make contact to when I leave. This I achieve directly by giving advice, doing financial or business coaching or indirectly via the different platforms on which I write or feature. I believe in honouring our parents and therefore I have nothing against those who do so. I concur with the writer of this article that helping out your family is not something wrong.

I saw it important to start off with the above treatise following a comment one reader (Lungile) once put on an article I wrote in July 2013 focused on providing Financial guidance to graduates.  “Most of the time these analysts fail to filter family structures and pressure. Our family particularly black SAns have an impact on our decision making due to how they deal with your being a graduate and the community you come from. In my view, it could help to add lessons like these to be part of basic education.”

My response to this comment was; “Each and every individual is different and any info that us 'analysts' provide is for people to get insights into things they might not have been aware of. The article had not chosen to differentiate people according to backgrounds as the lessons contained therein are applicable across different socio-economic/cultural/racial strata.  You did give an idea for another article, thanks for that. Will look at how to possibly address the individual(s) with the characteristics you have outlined.”

It has been almost 4 years since that comment and in all the different coaching sessions which I have conducted since then, the matter Lungile brought up has reared its head multiple times. This piece will in no way exhaust this particular subject matter but the aim is to stimulate conversations of how we can change the discourse in our generation.

Some reasons why ‘black tax’ exists

1) Parents savings & retirement plan

  • A colleague told me “some invest in stocks and bonds, our parents invested in us and they are expecting a return on their investment.”
  • For some people once they start working their parents no longer see the need to work and they leave the responsibility to take care of day to day household needs.
  • People are expected to help out the family when emergencies/crises arise such as funerals. This is why some have resorted to getting multiple funeral cover products.

2) Building a house

  • in the case where the parent(s) have not had a decent house to stay in, the children are expected to build a house for the parent. For those who already have a house they might need to do renovations to spruce up the place in order to make things better off.

3) Paying school fees for siblings and dependents

  • the duty to pay school fees for siblings ends up falling on the children.
  • In instances where the siblings have kids who the parents have been looking after, this duty also then falls on the person.

Contributors to black tax

The above are but a few examples of how ‘black tax’ has many people tied up. In all the conversations I’ve had about this subject matter, what makes things taxing is not just the expectation on individuals- it is also the lack of shared responsibility. This happens when there are others who are in a position to help but they in fact choose to leave one or few in the family to take on the responsibility.

Another issue which crops up is the lack of adequate stewardship of financial resources. When one starts working there is a societal expectation/pressure to conform into certain moulds of how ‘one who is a working’ should live like. If people could defer gratification and not rush to get the fancy set of wheels, upmarket apartments, fancy clothes etc it could help them stay out of DEBT- which is another major ‘tax’ people are subject to. Even when your income rises, you can avoid the income-lifestyle leap trap.

Although there are many financial products out there, not all of them are good for you. Lack of adequate Financial Know-how is a major contributor to  I once coached an individual who had two funeral covers from different companies (X & Y) for which each month she was paying a combined R500. When I questioned her a bit further about these covers it turned out the same people who were on cover X were on Y.

Silly though it might have sounded I asked, “how many times will you die and get buried?” She got the point because these policies were both covering the same things i.e. casket, funeral transport etc. Many are in this scenario because of not taking time out to actually scrutinise the contracts they enter into.

Way forward

I cringe every time I see the financial products (policies, covers etc) which are advertised during the peak hours on the national broadcaster’s channels. Most of these products are all geared towards ‘taking money’ out of people’s pockets instead of helping them obtain assets and grow their asset bases.

It is for this reason I am happy when people like Zibu MaSotobe posts the type of posts she does on Facebook debunking certain financial myths which people hold. Her platform and many others like our page IDI Finance seek to equip people to change the story for those in our generation.

We can’t deny the effects which apartheid had on limiting access to quality education and access to opportunities. Our generation however has the responsibility to radically transform the way we live life so that we can truly have economic empowerment in our generation.

For those who have figured out ways to handle and overcome the ‘black tax’ feel free to share in the comments as we move towards helping each other out. Though each of our stories are different, we can learn from each other and if we can avoid certain traps which others have fallen into- we would be a step ahead.

Some insightful links to check out on the matter:

Fulfilling your black tax obligation does not have to lead to financial ruin 

Dealing with black tax

Tips on dealing with black tax

Helping or enabling?

The burden of Black tax

Crisis of aspirations

Unilever aspirations study

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