South Africa

Government is planning to tax the super wealthy

CAPE TOWN - Government is planning to tax the super rich after the National Treasury confirmed in Parliament that Finance Minister Tito Mboweni will announce new taxes in his February budget next year and this would include the wealth tax.

But political parties are divided over plans by the government to introduce the wealth tax.

The new taxes would help to stabilise debt and raise up to R40 billion in the next few years.

The UDM said yesterday the government had no choice but to raise revenue, while Cope said this matter needed to be discussed and the DA said it opposed the wealth tax. 

Chief Director in the National Treasury Edgar Sishi told the joint committees on finance this week that plans were afoot to tax the super rich.

“The supplementary budget stated that there would be tax increases of R40bn over the next four years and this will be announced in February,” said Sishi.

In the Treasury documents tabled before the joint committees it stated that the wealth tax would help raise revenue. 

“The 2020 Supplementary Budget stated that there would be tax increases of R40bn over the next four years to help stabilise debt and that the specifics of the

tax increases will be announced by the Minister of Finance in the 2021 Budget,” read the documents.

“The Davis Tax Committee has done a number of research reports on these topics, including on the viability of a wealth tax, and how it relates to a land tax, an on estate duty,” stated the Treasury. 

UDM leader Bantu Holomisa said the government was in a tight fiscal space and it has to find money somewhere to support its programmes.

“We have no choice whether we like it or not, we have to get money somewhere to address problems in the country,” said Holomisa of the wealth tax. 

However, he said they could also look at other areas like cutting wastage and allow national and provincial governments to run the finances of smaller municipalities with no capacity.

“If I were them I would look at local government with a view to say the finances must be controlled by provinces or national government in these municipalities because they don’t have capacity, but maybe not the metros” said Holomisa.

DA spokesperson on finance Geordin Hill-Lewis said they do not support the wealth tax and this would lead to people affected shifting their money elsewhere.

“We do not support it because South Africa has already a progressive tax system. There is little you can gain by taxing the wealthy. What you stand to lose is that those people can move their money elsewhere. You can’t stimulate the economy by raising taxes,” said Hill-Lewis. 

Cope national spokesperson Dennis Bloem said Mboweni must bring in all political parties to discuss the matter.

He said the government cannot simply introduce the wealth tax without talking to other key stakeholders.

“We call on the Minister of Finance to call parties to discuss the wealth tax so that we have a better understanding,” said Bloem.

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