The PBO argued evidence showed a wealth tax could raise around R38 billion for the fiscus. This would be enough to counter the approximately R30 billion shortfall after the axing of the VAT hike.<\/p>\n\n\n\n
However, in the third reiteration of the 2025 National Budget Speech, Godongwana noted that fuel taxes would be adjusted for inflation to balance the withdrawal of the VAT hike.<\/p>\n\n\n\n
Following this, in a parliamentary Q&A session in June, the EFF questioned the reasons for the minister\u2019s continued refusal to introduce a wealth tax and\/or apartheid redress tax.<\/p>\n\n\n\n
This is despite what the EFF said is \u201cevidence and recommendations suggesting their effectiveness in mobilising fiscal resources for redistribution and development.\u201d<\/p>\n\n\n\n
It also asked whether the National Treasury’s policy position is to shield ultra-wealthy individuals. In response, Finance Minister Enoch Godongwana said there is no policy to shield ultra-wealthy individuals. <\/p>\n\n\n\n
He added that South Africa has a comprehensive and progressive income tax system, whereby those who earn more income are taxed at a higher rate. <\/p>\n\n\n\n
To illustrate the progressivity of the income tax system, Godongwana noted that it is worth citing tax statistics.<\/p>\n\n\n\n
\u201cThis shows that taxpayers with a taxable income over R1 million per annum make up only 6.7% of the personal income base; yet, they contribute 47.5% of the total personal income tax revenue,\u201d he said. <\/p>\n\n\n\n
More harm than good<\/h2>\n\n\n\n![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/04\/godongwana-kieswetter-1024x576.jpg\")
<\/a><\/figure>\n\n\n\nGodongwana also noted that, in terms of wealth, South Africa already has many instruments that tax wealth comprehensively. <\/p>\n\n\n\n
These include estate duty (on assets at death), donations tax (on asset gifts), securities transfer tax (on equity transfers), and transfer duties (on property transactions). <\/p>\n\n\n\n
In addition, municipalities impose property rates on land and buildings. The four national wealth taxes collectively contributed R22 billion in 2021\/22, R22.6 billion in 2022\/23, R19.4 billion in 2023\/24, and R21.3 billion in 2024\/25. <\/p>\n\n\n\n
Though this only accounts for about 1.15% of total tax revenue, it compares favourably to the OECD average of 0.5% from similar taxes.<\/p>\n\n\n\n
South Africa also taxes capital gains, a type of wealth tax, generating R15.6 billion in 2019\/20 and R16.4 billion in 2020\/21. <\/p>\n\n\n\n
According to Godongwana, this illustrates that the country already has a broad system to capture income and wealth. He added that international experience with wealth taxes has mainly been negative. <\/p>\n\n\n\n
\u201cSeveral countries have abandoned or reduced wealth taxes due to high administrative costs, limited revenue generation, capital flight, and complexity,\u201d he said. <\/p>\n\n\n\n
Currently, only Norway, Switzerland, Spain, and Colombia maintain what could be called true wealth taxes. <\/p>\n\n\n\n
In contrast, most countries opt for robust income tax regimes supplemented by capital gains taxes, which Godongwana considers more efficient.<\/p>\n\n\n\n
Referencing a 2018 OECD study, Godongwana argued that countries with well-designed income tax systems, including capital gains, are better at redistributing wealth than those relying on direct wealth taxes. <\/p>\n\n\n\n
\u201cIncome tax is the most effective way to tax the wealthy. It generates significantly more revenue for the fiscus in a more efficient and cost-effective manner,\u201d he said.<\/p>\n\n\n\n
<\/a><\/figure>\n\n\n\nGodongwana also noted that, in terms of wealth, South Africa already has many instruments that tax wealth comprehensively. <\/p>\n\n\n\n
These include estate duty (on assets at death), donations tax (on asset gifts), securities transfer tax (on equity transfers), and transfer duties (on property transactions). <\/p>\n\n\n\n
In addition, municipalities impose property rates on land and buildings. The four national wealth taxes collectively contributed R22 billion in 2021\/22, R22.6 billion in 2022\/23, R19.4 billion in 2023\/24, and R21.3 billion in 2024\/25. <\/p>\n\n\n\n
Though this only accounts for about 1.15% of total tax revenue, it compares favourably to the OECD average of 0.5% from similar taxes.<\/p>\n\n\n\n
South Africa also taxes capital gains, a type of wealth tax, generating R15.6 billion in 2019\/20 and R16.4 billion in 2020\/21. <\/p>\n\n\n\n
According to Godongwana, this illustrates that the country already has a broad system to capture income and wealth. He added that international experience with wealth taxes has mainly been negative. <\/p>\n\n\n\n
\u201cSeveral countries have abandoned or reduced wealth taxes due to high administrative costs, limited revenue generation, capital flight, and complexity,\u201d he said. <\/p>\n\n\n\n
Currently, only Norway, Switzerland, Spain, and Colombia maintain what could be called true wealth taxes. <\/p>\n\n\n\n
In contrast, most countries opt for robust income tax regimes supplemented by capital gains taxes, which Godongwana considers more efficient.<\/p>\n\n\n\n
Referencing a 2018 OECD study, Godongwana argued that countries with well-designed income tax systems, including capital gains, are better at redistributing wealth than those relying on direct wealth taxes. <\/p>\n\n\n\n
\u201cIncome tax is the most effective way to tax the wealthy. It generates significantly more revenue for the fiscus in a more efficient and cost-effective manner,\u201d he said.<\/p>\n\n\n\n