Unfortunately, the government gets a monthly share of your income. That alone can be annoying, but there’s a more sinister form of taxation called black tax.
Originating in South Africa, the term describes the money Black workers — especially professionals and those with higher incomes — often give to their families out of duty or concern for them.
But how do people feel about sending money back home from their earnings?
We spoke to some people about why they send money home and how it impacts their finances
A sense of guilt
When parents make sacrifices for their children’s upbringing, the children often feel indebted as they grow older. Once they start earning, the needs of their parents and other family members may be impossible to ignore.
Shelly, who works with a government agency in Abuja, explains how a sense of guilt makes her send money home, “I went to an expensive private school. The cost of my university education was a huge burden for my parents, who had to beg the school many times for me to remain in school.
“Unfortunately, during my final year, I had an extra year. My parents had to take a loan and use their car as collateral to pay my school fees. Because they were unable to repay the loan, the car was seized and used to fulfil the loan contract.”
Now that Shelly is working, she finds herself paying for her parents’ rent and expenses. She barely has personal savings and leans heavily on her husband since all her money goes to her family.
In some cases, parents may transfer almost all the household responsibilities when an adult starts working. Such a person is even taxed with putting their younger ones through school.
Fisayo, who works as a front desk officer in Lagos, still lives with her parents, but she can’t avoid black tax. “People are shocked when I tell them I still spend a lot of money even though I live with my parents. They think I would be saving money since I don’t pay rent, but I find myself paying part of my sibling’s school fees, sending them money,” she said.
Generational poverty
Historically, Africans and people of African descent exist in struggling communities or developing economies across the world, making generational poverty a biting reality.
According to Forbes, among the nearly 3,000 billionaires in the world, only 16 are Black — less than 1%. When one member of a Black family succeeds, they’re seen as the saviour of the entire family. But that responsibility can be draining for the provider.
Yomidun laments, “Sometimes, I get so angry with that I haven’t got rich parents. If it isn’t that my father needs drugs today, it’s his phone got spoilt or I should send him the money, he’s broke, or there’s a family contribution my mother needs me to help her with.
“Like how do adults have zero savings? I get that they sacrificed a lot for me, but sometimes I need to breathe. How can I save when I’m helping them put off fires at home?”
How to navigate the black tax
How can you give to your family, have savings and investments and live a comfortable life?
Roland, a tech bro who lives abroad, says, “People back home are asking me for money almost every day. I try to answer as many as I can. However, to avoid sending all my money back home, I budget about $500 for black tax every month and I never exceed that amount. Unfortunately, that reduces the total number of people I can give money but I make sure those I give end up with something tangible.”
I spoke to Yomi, a chartered accountant and senior auditor at Deloitte Nigeria, about how to navigate black tax. He said, “Don’t do it because you are being pressured or because your parents entitled. The money you send home does not have to be a lot of money, but it has to be consistent.”
The interesting thing about paying black tax is that if not properly done, it can perpetuate circles of generational poverty in the family, especially in situations where young people are still struggling financially. As a young person tries to remove their family from poverty, they might find themselves sinking into poverty too.
“You need to have savings; you’re not working just for the present but for the future. If you want to consistently send money home and save, then you have to be on a strict budget; you must put money aside for your necessities like rent, transport, personal development, and food. Put money aside for savings before you send money home,” Yomi concludes.
*Names were changed to protect the identities of the subjects.