It’s going to cost Sars to put an effective wealth tax in place
A complex architecture is needed to ensure wealth is accurately valued — but that doesn’t mean we can’t make a start
There have been a number of recent calls for the introduction of a wealth tax as a form of social solidarity during the Covid-19 pandemic, to plug the fiscal deficit while reducing wealth inequality. Even before the coronavirus struck, SA was one of the most unequal societies in the world both in terms of wealth and income. This inequality is a direct, deliberate by-product of apartheid policies and, in the decades after democracy, policy implementation failure and state capture. These divides will inexorably be exacerbated during and after the pandemic.
It is important to note that the fiscal system is already highly pro-poor in relation to social grants, and progressive in relation to the tax system as a whole. Some forms of taxes on wealth already exist, by way of transfer duty, donations tax, property rates and estate duty. There is also a capital gains regime on financial assets and investments. Wealth taxes may increase vertical, horizontal and intergenerational equity, ...
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