The so-called “black tax” affects Africans across the continent.
Read on to learn what black tax is and how you can avoid paying (too much of) it.
What is Black tax?
Black tax is a widely used term across the world that has its origin in South Africa.
In simple terms, black tax refers to financial support that is automatically expected from a black person who has completed studies and started making money through employment or business.
In most cases, black tax is expected to be paid back to the community and family members without prior consultation. It’s expected that automatically once one gets a good job they should begin offering this support to their families.
In a sense, the expectation of the black tax is linear; it is a perfect trajectory of how events should turn. An average individual will work hard in school, be of good nature and morally upright in the society and eventually get a bursary to a college, eventually get a job and immediately begin giving back to the community and family members.
Many have argued that much of black wealth gets stunted in such practices as the expectation of black tax. The word tax probably comes from the fact that one is paying back for the help they received from their community and family through school.
Africa, unlike many other parts of the world, has always been very communal. The famous saying, “ it takes a village” to raise a child is taken literally.
In communities in Kenya, for instance, the spirit of ‘Harambee’ is common. ‘Harambee’ is a Swahili word that means, ‘let’s pull together. It’s famously used in fundraising efforts and especially those that involve community service or raising school fees. In some parts of the country, it is unheard of that one can turn away a request from a parent raising school fees.
What this means, therefore, is that these children grow up to be adults that feel indebted to the community and family. They feel the need to pay a tax back to the people that contributed to their education. Hence, the term “black tax.”
How Black Tax Affects Black Wealth
While it’s good to keep the spirit of community and help people that are in need of financial help, black tax is a form of financial exploitation from the extended family. It has continually contributed to the perennial poverty in most families in Africa.
Many young professionals and youths in Africa are unable to progress well due to the curtailing effects of having to plow back the little income they get at first in form of black tax. In some cases, the financial need is too much that people take out loans to cater to the needs of the extended family. This means that people are constantly getting into debt, instead of investing for the continuity of the money.
How to Mitigate Effects of Black Tax
There is an important conversation that is long overdue on the effects of this financial expectation and ways to mitigate its effects. As a young African professional, how do you make sure that you not only anticipate this black tax but also work towards managing it?
Here are some tips:
i. Realise That It’s Impossible to Help Everyone
While it took a village to raise you and educate you, it’s a bit hard to give back to all of these people. Normalise saying no to financial requirements that you cannot meet comfortably. Getting into unnecessary debt only leads to financial derailment.
ii. Teach Responsibility
In addition to saying ‘no’ it could be helpful to follow it up with reasons and teach family members responsibility especially on financial expenditure.
Where possible, you can find out the greatest need for money and make an investment that can give cash flow to be used whenever these needs arise. This could be informed by setting a self-generating business, such as a retail shop for the family to rely on. This will mitigate the financial needs and requirements for the family and in return give your bank account a break. Also, it’s important to advise people on saving tips where you notice that there is porous spending.
iii. Plan for the Black Tax
Realistically speaking, it will be a while before the community comes around with this black tax menace. Therefore, it could be wise to always set aside some part of the money to cater for such requests from family. Putting this in your budget makes it easy to meet the need without plunging into debt.
While black tax is prevalent in the African setting, it’s possible to mitigate its effects and to help teach the community to manage their expectations.