Thursday, 17 September 2015

If you want to make enemies, try to change something

(First appeared in New Era 20 May 2015)

This week, I take a quote from Thomas Woodrow Wilson (1856-1924) who was the 28th President of the United States of America (1913-1921). He held a PhD in Political Science and was the President of Princeton University (1902-1910). He wrote various books including a textbook used in colleges in which he argued that government should not be deemed evil and advocated the use of government to” allay social ills and advance society's welfare”.
The past week it was my privilege to have my ten year-old stepson staying with us during the school holidays. At one point, I was playing a game involving Star Trek characters and he asked what that was. I tried to explain but found that the generation gap of what we had watched on television was too broad. Nevertheless, it was good to again watch an episode together and hear the words “To boldly go where no man has gone before”.
The present Housing Crisis (yes it is a Crisis with a capital letters), needs bold actions to address the plight of the landless. No citizen can truly feel the rewards of Independence, without being able to state, “there is my home - it belongs to me”.
Let us look at some bold measures that could be enacted to help the Namibian consumer achieve that dream.
1. Create a National Mortgage Association. The NMA should provide banks with state money to finance home mortgages. This will raise levels of home ownership and the availability of affordable housing. The state should also regulate that at least 55% of these mortgages should be allocated to low- and moderate-income housing.
2. Rental income should be taxed. In many countries rental income is taxed on a progressive basis and helps to cap the greed of landlords. In Tanzania for example, rental income is taxed at 31.45% 0 definitely a barrier to capitalistic tendencies in the market.
3. Have higher property taxes for home owners with more than one property. This should also put a dampener on the view that individuals can become rich through renting at exhorbitant prices.
4. The lands register should be investigated and all companies (close corporations, etc.) should be taxed at a higher rate on residential properties if this is not their place of business. In other words, companies that own property for the purpose of residential leasing should be taxed higher to reduce the undue pressure on house prices.
5. Introduce a Capital Gains Tax (CGT) that will tax non-residents when they sell a property. This will help to reduce the number of foreign investors who see the Housing Crisis as an opportunity to make money through speculation of property. This can also be expanded to include companies owning property to reduce speculation by businesses in the home market. Namibia has the lowest rate of 0% compared with 25% and 40% in Botswana and South Africa respectively.
6. Remove price increasing legislative effects in the housing market. At present too many industries receive “infant protection” and other measures to allow them to increase their selling price without meeting competitiveness in the market. If, on the one hand we argue for a free market economy in housing, why do we introduce statutory false selling prices by giving infant protection to industries such as cement manufacturing? The prices in Namibia for many of the materials used in housing are high because of legislation within Namibia and the Southern African Customs Union (SACU). Creating jobs that do not allow the working population to own property will only continue the history of an indentured labour.
7. Establish a Rent Control Board. I have written about this in last week’s column and hope the readers have looked at the arguments put forth. The rent control should peg the amount of rent charged to the bond repayment such a property would have to repay.

The bottom line issue of the Housing Crisis remains: Without home ownership, a citizen feels like a foreigner in their own country.

No comments: