Abstract
This paper analysed how black tax impacts the working-class millennial in South Africa. Areas considered were challenges it presents, social mobility, awareness of black tax, determining if there is a trend in incidence by ethnicity, and an overview of family structures by those impacted by black tax. Black tax, in the context of South Africa, can be defined as income that black working-class individuals are forced, by
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circumstance, to set aside to provide for their less fortunate family members. Based on this, it can be said that black tax is one of the ways in which income redistribution takes place. This in many cases has created scenarios where the unintended consequences, that are not spoken of, cannot be ignored. South Africa is characterised as having the highest levels of income inequality in the world. In addition to this, the South African Treasury has earmarked South Africa’s retirement readiness at 6%, meaning that only 6% of the population can afford to retire. These findings highlight the need to address the various factors contributing to the rise in inequality that prohibits wealth creation, despite the country having obtained independence over three decades ago and efforts to redistribute wealth through affirmative action structures. Black tax has been identified as one of such factors. This study used the quantitative method to explore the impact that black tax has on the working-class millennial in South Africa by way of a cross sectional survey. One hundred and sixtysix responses were analysed. Findings shows that although black individuals are not the only ethnic group that experiences black tax, they do make up a majority of those impacted by it. Results also show that there are mixed sentiments towards black tax, a significant percentage of those impacted by it experience a hindrance to social mobility and family structures tend to be more complex for benefactors of black tax. This study emphasises the impact black tax has on millennials, with a need to focus on financial literacy, education and planning to better manage the impact of black tax.
Key words: black tax, benefactor, millennial, social mobility, interfamily financial
transfers, sandwich generation.