News24
20 Jan 2021, 23:43 GMT+10
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. The concentration of wealth is more extreme than in France, the U.S., the U.K., Russia, China or India, and has not decreased since 1993, according to the study published 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 and would only be levied on wealth above that level. 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."
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.
A wealth tax would face challenges, the authors said.
Some rich South Africans would leave and others would find ways to circumvent it, and the amount of personal wealth targeted by such a tax could fall 30%, Czajka said in an interview. Still, the tax revenues would be considerable, he said.
South Africa is a good candidate for a wealth tax because its income disparity means that relatively few people would be affected and the quality of data collection by the tax authority is superior to some high-income nations, Chatterjee said in the same interview.
Get a daily dose of Beijing Bulletin news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Beijing Bulletin.
More InformationNEW YORK CITY, New York: The U.S. must accelerate its efforts to develop fusion energy or risk losing its edge to China, Virginia Governor...
Washington, DC [US], March 16 (ANI): SpaceX Dragon spacecraft carrying NASA astronauts Anne McClain and Nichole Ayers, Japan Aerospace...
WASHINGTON, 15th March, 2025 (WAM) - NASA and SpaceX on Friday launched a long-awaited crew to the International Space Station that...
NASA astronauts Butch Wilmore (L) and Suni Williams are seen before boarding Boeing's Starliner spacecraft at Cape Canaveral Space...
Russia and the US should work together for the glory of humanity, not its destruction, sovereign wealth fund head and economic envoy...
Cupertino (California) [US], March 15 (ANI): Apple has introduced a new app called 'Surveyor', designed to collect real-world mapping...
NEW DELHI, India: Jaguar Land Rover (JLR) has decided against manufacturing electric vehicles at Tata Motors' upcoming $1 billion factory...
LONDON, U.K.: Virgin Group is seeking to raise $900 million to fund its plan to launch cross-channel rail services, positioning itself...
SEATTLE, Washington: Boeing saw a significant increase in aircraft deliveries in February, reporting 44 planes delivered compared to...
DALLAS, Texas: Southwest Airlines will start charging passengers for checked bags, ending a long-standing policy that set it apart...
NEW YORK, New York - U.S. stocks rallied hard on Friday, boosted by strong rises around the world. Investors shrugged off a decline...
MILAN, Italy: Maserati has scrapped plans for an electric version of its MC20 sports car, citing low expected demand for the high-performance...