6 days Ago
The ever-present talk of imposing a wealth tax on South Africans as a source of revenue has resurfaced after the National Treasury's plan to collect an additional R58 billion mainly from higher VAT in the 2025/26 financial year, was stopped in its tracks with the postponement of the National Budget. Business Day quoted "senior officials aligned to the ANC" within the Government of National Unity (GNU), saying a wealth tax was among the proposals at a special Cabinet meeting on Monday to boost the state coffers after coalition partners in the GNU blocked the Budget scheduled for February 19, 2025. Treasury's proposed 2 percentage points increase in the VAT rate is believed to be the main reason for this unprecedented postponement of the Budget.
These sporadic calls for a wealth tax come despite several warnings from economists, tax experts, and political parties over the years that it is a detrimental move that may result in a surge in the brain drain from South Africa, a shrinking tax base as mobile high-net-worth individuals (HNWI) can easily emigrate and transfer their money offshore, and a slump in investor confidence. The Davis Tax Committee back in 2018 recommended that the decision on whether to implement an annual net wealth tax cannot be made without further consideration as to the appropriate tax base (i.e.
which forms of wealth to include within the scope of the tax), comprehensive data on the pattern of wealth ownership, and an evaluation as to whether the revenue generated would exceed the administrative and economic burden on taxpayers and the revenue authorities. Leaving SA physically and financially Statistics show many wealthy South Africans residing abroad have already finalised the formal process of financial emigration with the..
. Tax Consulting South Africa.
