On 25 April the Davis Tax Committee (DTC) - established by the Minister of Finance in 2013 to inquire into the role of the tax system in the promotion of inclusive economic growth, employment creation, development and fiscal sustainability - released a media statement calling for written submissions on possible wealth taxes for South Africa.
The DTC will take into account recent domestic and international developments and, particularly, the long-term objectives of the National Development Plan (NDP). In addition, the DTC is also required to take into account broad tax policy objectives like:
· Revenue-raising to fund government expenditure is the primary objective of taxation;
· Social objectives like building a cohesive and inclusive society can be met partially through a progressive tax system and a redistribution of resources.
Currently, South Africa has three forms of wealth taxation, namely estate duty, transfer duty, and donations tax which together bring in about 1% of tax revenue. Capital Gains Tax (CGT) is considered by some to be a form of wealth tax but the DTC has taken the view that CGT is a form of income tax.
Capital Gains Tax (CGT) is considered by some to be a form of wealth tax but the DTC has taken the view that CGT is a form of income tax.
The DTC invites submissions by 31 May on the desirability and feasibility of the following possible forms of wealth tax:
1. A land tax
2. A national tax on the value of property (over and above municipal rates)
3. An annual wealth tax based on the written submissions received; this will be followed by a workshop for oral submissions during June 2017.
