Will South Africa’s rich pay wealth tax or find ways to avoid it?

The wage slaves among us, who struggle to makes ends meet from month to month, might well cheer at the news that there could be a wealth tax on the rich coming in tomorrow’s budget.

But then, a chill: What is the finance minister’s definition of wealth?

Already, the reality is that just 7.5 million taxpayers contribute 37.4% of total tax revenue collected in this country… and private income tax is still the biggest slice of government income.

As an aside, those numbers by themselves give the lie to the complaint often trotted out by the free market support club, that the supposedly “communist” ANC government hates business.

Businesses pay lower levels of tax than individuals.

Not much difference, then, between a revenue system geared to cosseting business, which is favoured by US President Donald Trump and his billionaire backers, is there?

An even more alarming number is that of those 7.5 million taxpayers, just 500 000 pay 50% of all tax collected by the SA Revenue Service (Sars).

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This group includes individuals who earn more than R1 million a year and includes foreigners working here on contracts.

Those figures underline the gap in wealth which exists in this country – but they don’t even include the mega rich or those without work.

Tax avoidance

A wealth tax is an appealing tool to any government which wants to look pro-poor, but experience worldwide shows that such levies seldom do what they are intended to do.

Many of the wealthy can afford the sort of tax advice and tax avoidance schemes which significantly reduce their due.

And also, the ultrarich have the luxury of taking their money offshore.

Income tax has reached the stage where there’s no more blood in the stone. Now it’s time to seriously cut government spending.

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