Black Tax - for Dummies

Let me set out a scenario for you, end of the month finally arrives, and you’re super excited to finally get your hard-earned paycheck in your wallet. Before you can even begin to ponder how to structure your budget, you get an unexpected (yet expected) call from your distant relative telling you, “ Hey John! I’m struggling with XXX this month, I heard you got a new position so is their anyway you can help me?” – Even though this is a very generic scenario which will likely never be worded this way, it is definitely something that has been faced by many black professionals in the community.

Black tax is something that almost all successful young black people have to deal with. Urban Dictionary defines the phrase as: “The extra money that black professionals are expected to give every month to support their less fortunate family and extended families”. Every black person knows how it goes: there’s the normal tax every Namibian citizen has to pay then there’s black tax which hinders one from saving or investing.

Just to put a disclaimer before getting into the meat of this:

1. This article is not written to bash any extended family. Trust me.. I love you all.
2. I’m personally not looking down on the concept of “black tax”.
3. For our non-black readers, I’m not discrediting your own family tax struggles. Again.. trust me.

Now that we got all that out of the way let’s get started.

A History Lesson

Before we can discuss how to change the narrative, it’s worth going back a couple of decades. Prior to Namibia’s independence the country faced apartheid which was a policy that restricted black people from adequate social welfare, decent jobs and an overall better standard of living. The effects of this policy are still prevalent today with Namibia ranking as the second most unequal nation in the world with a Gini coefficient of 0.591.

When Namibia gained independence in 1990, a large amount of white people entered our new democracy with generational wealth, also known as “old money”. This gave them a financial jumpstart over the majority of black Namibians, who transitioned into the new period with little more than the shoes on their feet.

As these previously disadvantaged black people founded businesses and rose through the corporate and socioeconomic ranks, they felt obliged to use their newfound wealth to address the disadvantages suffered by their parents’ generation. And so black tax was born.

Research into many socialist movements argue that people will not ordinarily participate in an activity unless they feel deprived by that thing. In other words, because many successful first generational black people have actually felt what its like to be underprivileged, they will have a keen interest in helping family members break the cycle of poverty.

A handout or a social investment

A key mentality to develop when dealing with black tax is creating the differentiation of whether your contribution is a handout or a social investment. As a semi-successful black professional, there’s always going to be some family who’ll need your help. It is therefore essential that you structure your budget according to what you deem as an essential family need, or a family want.

Instead of sending money to fund your cousins’ new wig, or aunties new polo that she can’t afford, rather look to place that contribution to a family members tuition, or school clothes. This differentiation will automatically make you feel better as your black tax will go to something enriching as opposed to a simple handout.

This action is not however as black and white as it seems. One may send funds with the purpose of it going to school clothes, however as soon as it’s in the family members pocket it might end up funding that glorious new N$ 500 wig. Its therefore important to know who in your family you trust to be the recipient of your black tax. Carefully vet your family members to know who will actually use your contribution as a social investment rather than a handout.

Being the much needed change

The trick to approaching the way we look at black tax starts with the name. How did such a potentially beneficial act become known as “tax”? It’s no surprise that many people choose to avoid it! Instead of thinking of it as a grudge expense, we have to change the mentality towards it, and see it as a social investment. And the return on that investment? The positive change that you would have created.

Shaking the shackles of Black Tax off requires collective effort and thinking in generations and not just for the now. Strict budgets should be made to cover essential family needs only. I’m never going to tell you to cut every family member off, as I don’t feel that’s the answer. What I am saying is to contribute only to the essentials and to never go overbudget.

To end this off, I’ll leave a quote by a well-known South African Economist, Kenosi Magosha:

“The realities of Black Tax have been a challenge particularly now during the tough economic times we find ourselves in. While we work on supporting each other during these tough times, it is important that we establish principles and habits to enable financial resilience and prosperity for you, your family and future generations”.