{"id":865253,"date":"2026-07-02T10:45:53","date_gmt":"2026-07-02T08:45:53","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=865253"},"modified":"2026-07-02T10:45:56","modified_gmt":"2026-07-02T08:45:56","slug":"wealth-tax-on-the-rich-in-south-africa-shot-down","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/wealth\/865253\/wealth-tax-on-the-rich-in-south-africa-shot-down\/","title":{"rendered":"Wealth tax on the rich in South Africa shot down"},"content":{"rendered":"\n

Finance Minister Enoch Godongwana says the government is currently not considering a wealth tax, noting that it has been ineffective in several international markets. <\/p>\n\n\n\n

The concept of wealth taxes has gained popularity worldwide amid growing global economic inequality. South Africa has some of the highest income inequality in the world. <\/p>\n\n\n\n

Responding to questions from the EFF’s Carl Niehaus, Godongwana said that there are currently several instruments that comprehensively tax wealth in the country. <\/p>\n\n\n\n

He said that wealth is taxed through a combination of asset taxes: estate duties levied on assets at a person’s death, donation taxes, security transfer taxes, and transfer duties for real estate. <\/p>\n\n\n\n

He added that all real estate, land and buildings are taxed at the local level through property rates and taxes.<\/p>\n\n\n\n

The total annual tax revenue collected from the four national wealth taxes, excluding local property taxes, amounted to R21.3 billion in 2024\/25, down slightly from R22 billion in 2021\/22. <\/p>\n\n\n\n

“This is a contribution of 1.15 per cent to total tax revenue, which compares favourably to the OECD average of 0.5 per cent for similar taxes,” the Minister said. <\/p>\n\n\n\n

“In addition, South Africa levies capital gains tax, which is essentially a tax on wealth gains. Capital gains contributed an additional R15.6 billion to the fiscus during 2019\/20 and R16.4 billion in 2020\/21.” <\/p>\n\n\n\n

Godongwana added that international evidence shows that several countries have abandoned or reduced the scope of their wealth taxes over the years because they proved ineffective. <\/p>\n\n\n\n

This resulted in countries implementing inheritance tax\/estate duty, or other measures, or doing so altogether. <\/p>\n\n\n\n

While 12 countries had a wealth tax in 1990, only Norway, Switzerland, Spain and Colombia have one today. <\/p>\n\n\n\n

The main reasons for abolishing wealth taxes include the high cost of collection, administrative complexity, the risk of capital flight, limited revenue, and negative impacts on economic growth. <\/p>\n\n\n\n

“Due to their impact on savings and capital formation, studies for the UK, Germany and the U.S. suggest a reduction in GDP growth,” the Minister said. <\/p>\n\n\n\n

“Growing tax revenue depends on economic growth, so any reductions in economic growth would negatively impact tax revenue.”<\/p>\n\n\n\n

Stay focused on income taxes <\/h2>\n\n\n
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The Minister added that a study on net wealth taxes in the OECD found that a comprehensive income tax system that taxes capital gains is better. <\/p>\n\n\n\n

This system is more effective at generating revenue and redistributing wealth than taxes that specifically target the stock of wealth, he said. <\/p>\n\n\n\n

He added that the nation already has a comprehensive and highly progressive income tax system, with top earners paying a top marginal rate of 45%. <\/p>\n\n\n\n

“In line with international best practice, South Africa levies capital gains tax to ensure the income tax system is sufficiently progressive and comprehensive.” <\/p>\n\n\n\n

“Income tax is the most effective way to tax the wealthy, and it generates multiple times more revenue for the fiscus in a more efficient and cost-effective manner.” <\/p>\n\n\n\n

He said that wealthy taxpayers contribute the largest amount to personal income tax in South Africa, which is the norm in many countries. <\/p>\n\n\n\n

The 2026 Budget showed that the top 13% of taxpayers contribute 60% of total personal income tax revenue. <\/p>\n\n\n\n

“It is this tax base that will be most at risk of relocating with the introduction of a wealth tax.” <\/p>\n","protected":false},"excerpt":{"rendered":"

Finance Minister Enoch Godongwana says that a wealth tax is not in the works in South Africa, with limited evidence of such taxes working across the world. <\/p>\n","protected":false},"author":95,"featured_media":857417,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9880],"tags":[25708],"class_list":["post-865253","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-wealth","tag-finance-minsiter"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/865253","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/95"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=865253"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/865253\/revisions"}],"predecessor-version":[{"id":865275,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/865253\/revisions\/865275"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/857417"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=865253"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=865253"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=865253"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}