Tax the rich in South Africa: economist
As much as 60-65% of total income in South Africa goes towards the top 10% of earners, making it among the most unequal countries in the world.
This is according to French economist, professor Thomas Piketty, who told an audience in Soweto over the weekend that “South Africa is top of the class, so to speak”.
Piketty was giving the 13th Annual Nelson Mandela Lecture at the University of Johannesburg’s Soweto campus.
He said that in countries like Spain and Greece, which also have high rates of unemployment (25%), the inequality was less of an issue, with the top 10% of earners accounting for closer to 30-35% of total earnings.
He said that even if the data wasn’t perfect, it is clear that the problem is not just related to unemployment.
Piketty stressed that he was not in the country to pontificate, but that he has been trained to see what can be learnt from history.
The economist said it was possible in South Africa to introduce an annual tax on net wealth.
“South Africa will benefit from increased transparency about who earns and who owns what in SA. I think it will be important and absolutely possible for SA to introduce an annual tax on net wealth.
“A progressive and annual tax and net individual wealth, even if it comes with very low tax rates to begin with,” he said, suggesting a zero percent for those below R1 million, 0.1% for those between R1-R10 million, and 0.5% for those above R10 million, as an example.
“The big advantage of tax on wealth is that it will produce democratic transparency and wealth and we will know more about who owns what in South Africa and how it is changing over time.”
Piketty also called for a minimum wage. He said that the country should be able to find the right level for a minimum wage.
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