Wealth tax on South Africa’s richest people could raise R160 billion, study shows

0:00
play article
Subscribers can listen to this article
Experts believe a wealth tax would narrow inequality in the country and raise as much as R160 billion. Picture: iStock
Experts believe a wealth tax would narrow inequality in the country and raise as much as R160 billion. Picture: iStock

BUSINESS


An annual wealth tax on the net worth of South Africa’s richest people could raise as much as R160 billion and would narrow inequality in a nation where the most affluent 1% of the population own 55% of personal wealth, a study showed.

The study, carried out by groups including the World Inequality Lab of which Thomas Piketty is co-director, assessed personal wealth in South Africa and proposed a range of taxes on net wealth of above R3.82 million, or the top 1% of the population.

South Africa is one of the world’s most unequal nations, a legacy of the apartheid system of racial discrimination that disadvantaged the black majority and ended in 1994.

A progressive wealth tax concentrated on those most capable to pay would be a significant policy tool to finance debt reduction.
World Inequality Lab study

The concentration of wealth is more extreme than in France, the US, the UK, Russia, China or India, and has not decreased since 1993, according to the study published on Wednesday.

Under the moderate tax scenario, about 350 000 individuals would be subject to the tax, with the level ranging from 3% to 7% depending on affluence.

The top rate would apply to people with a net worth of above R146.89 million. Raising R160 billion in tax would be equivalent to 3.5% of gross domestic product, the study said.

RECORD CONTRACTION

“A progressive wealth tax concentrated on those most capable to pay would be a significant policy tool to finance debt reduction,” it said.

It would spare the “most vulnerable households, thus placing South Africa in a better position for an economic rebound.”

Read: Wealthy taxpayers set to cough up R40bn

South Africa’s economy is estimated by the government to have contracted by the most in nine decades because of the coronavirus pandemic.

The study was authored by Amory Gethin of the World Inequality Lab, which is linked to the Paris School of Economics, together with Aroop Chatterjee of Johannesburg’s University of The Witwatersrand’s Southern Centre for Inequality Studies and Leo Czajka of the Universite Catholique de Louvain in Belgium. – Bloomberg


facebook
twitter
linkedin
instagram

Delivering the 

news you need

+27 11 713 9001
news@citypress.co.za
www.citypress.co.za
69 Kingsway Rd, Auckland Park
We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24

E-Editions

Read the digital editions of City Press here.
Read now
Voting Booth
The EFF has sent a legal letter to President Cyril Ramaphosa’s office, demanding that the lockdown regulations be relaxed to allow political gatherings in compliance with all Covid-19 protocols. The party said that regulations prohibit political campaigning and activities in preparation for this year’s local government elections.
Please select an option Oops! Something went wrong, please try again later.
Results
Like church members, political party members should gather
21% - 25 votes
I fear the third wave
40% - 49 votes
Hold off on the elections
39% - 47 votes
Vote