SA mulls annual wealth tax - TechCentral

SA mulls annual wealth tax

South Africa’s finance ministry has asked for a study into the introduction of an annual wealth tax as the government seeks to boost the standard of living of the black majority.

The Davis Tax Committee, which makes recommendations to the national treasury, also requested submissions from the public on the feasibility of a land tax and a national tax on the value of property in addition to existing charges, it said in an e-mailed statement on Tuesday.

It will take comments until 31 May before holding hearings.

The move comes two months after the government increased the top income tax bracket by four percentage points to 45% and as President Jacob Zuma called for “radical economic transformation” in his final year as leader of the ruling party. The ANC says the white minority still dominates ownership of the economy more than two decades after the end of apartheid.

“The distribution of wealth in South Africa is highly unequal,” the committee, led by judge Dennis Davis, said. “It is well established that economic inequality inhibits economic growth and undermines social, economic and political stability.”

South Africa currently has estate duty, transfer duty and a donations tax, while capital gains tax is viewed as a tax on income rather than wealth, the committee said. The study was requested by now ex-finance minister Pravin Gordhan, Davis said by text message.

The treasury is struggling to meet its revenue targets amid sluggish economic growth. The tax agency fell R30bn short of its projection in the past fiscal year, the biggest gap in seven years. The government has pledged to cut the fiscal deficit to 2,6% of GDP in two years, from 3,1%.

“The only way we can look at how we can address income inequality is to create more wealth and more jobs,” said Mike Schussler, chief economist at Johannesburg-based research group Economists.co.za. “In an era where there is competition between tax jurisdictions, they are going to struggle to collect more revenue. People are going to spend more time hiding their wealth.”  — (c) 2017 Bloomberg LP

3 Comments

  1. CharlieTango on

    The answer is to prevent corruption in government and the looting of tax revenue – not more taxes!

  2. Dianne Miller on

    If you want a tax revolt.. keep going.
    No one is going to work to sponsor a government who steals from its citizens. Where are the roads, the police, health care, hospitals, prisons, schools… etc.

  3. Elias Tšotetsi on

    It is always breaking my heart when people speak as if all White have jobs and are well off. Every time – as in this article – Blacks are portrayed as poor while they have taken most of the jobs in government, municipalities big private companies like banks. Whites might be largest shareholders in these private companies but who are majority workers? Do you see any your white boys and girls in government institutions, companies and private companies? White young people are forced to go overseas to get employed as their country is punishing them for the sins of their forefathers who saw Blacks as animals who did not deserve any respect. Blacks and Whites need each other to have a prosperious South Africa.

© 2009 – 2020 NewsCentral Media