Share

No hasty decisions on wealth tax, says Ramaphosa's economic advisor Trudi Makhaya

Pretoria - Government must digest the entire body of work coming out of the Davis Tax Committee before making decisions about a possible wealth tax, says President Cyril Ramaphosa's economic advisor Trudi Makhaya.

In an interview with Fin24 at the Union Buildings in Pretoria last week, Makhaya said there were many separate discussions about tax being held and the recommendations by the Davis Tax Committee should be considered holistically.

Makhaya said the increase of the Value Added tax (VAT) rate to 15% in April had sparked fears that South Africa was moving away from a "progressive tax system" where wealthier segments of society subsidise the public provisions of services.

"There’s a [VAT] panel that’s been put in place to deal with some of the concerns that I and many others had around this idea," Makhaya said.

She admitted that increasing VAT "didn’t seem to be the best idea" to ensure that tax didn't affect the poor disproportionately, adding that if SA were a middle-class society, there would be less concern about raising the costs of most goods and services.

In what was seen as a concession to calls for higher taxes on wealthier individuals, the February budget review raised estate duties from 20% to 25% for estates worth R30m and higher.

The Davis Tax Committee, headed up by Judge Dennis Davis, was appointed in 2013 by then Finance Minister Pravin Gordhan to assess that country’s tax policies.

First steps

In a report in April, the Committee acknowledged the high levels of wealth and income inequality in SA and the existing forms of wealth taxes in the forms of Transfer Duty, Estate Duty and Donations Tax only raise very small amounts of revenue.

The report advised that as a first step, the South African Revenue Services (SARS) should ask taxpayers who are required to file income tax returns, to declare their assets and liabilities in the 2019/2020 fiscal year in order for government to gain a clearer picture of the wealth in the country and decide how to tax it. 

The Davis Tax Committee concluded that more work is needed to ensure that the introduction of a wealth tax is "well designed and will yield more revenue than it costs to administer".

Several countries, such as Denmark and India, have dropped a wealth tax due to the high costs of administration and high numbers of the very wealthy shifting their money out of the country to avoid paying their increased obligations.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
19.08
-0.9%
Rand - Pound
24.03
-0.6%
Rand - Euro
20.57
-0.5%
Rand - Aus dollar
12.38
-0.2%
Rand - Yen
0.13
-0.9%
Platinum
890.97
-0.7%
Palladium
988.99
-1.3%
Gold
2,195.56
+0.0%
Silver
24.43
-0.9%
Brent Crude
86.09
-0.2%
Top 40
67,885
+0.3%
All Share
74,077
+0.2%
Resource 10
56,208
+1.0%
Industrial 25
103,636
+0.4%
Financial 15
16,471
-0.3%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders