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The price of a wealth tax in South Africa

Annual wealth tax on trusts would ‘tie in’ with the tax system.

The hotly-debated issue of a wealth tax for South Africa’s already overburdened taxpayers is squarely in the limelight with the invitation from the Davis Tax Committee (DTC) for public submissions on the desirability and feasibility of such a tax.

Read: Public debate on possible wealth tax launched

French economist Thomas Piketty aroused the idea of a wealth tax in his book Capital in the Twenty-First Century, and his philosophies have been widely quoted by DTC chair Dennis Davis.

The proposed forms such a tax may take in South Africa include a land tax, potentially just a tax on agricultural land, or land over a particular size, a national tax on the value of property (over and above municipal rates) and an annual wealth tax, basically an estate duty payable every year, not just at death.

The deadline for submission is the end of this month and a group of concerned tax and wealth professionals have already begun research and drafting submissions on this issue. 

Keith Engel, CEO of the South African Institute of Tax Professionals, says these taxes would represent an additional charge on middle class and wealthier persons, depending on the threshold.

“All three (proposed) taxes are annual wealth taxes. The net result is another tax increase,” he says.

“Many people are now paying more than 50% of their income in tax once VAT and other indirect charges are being taken into account. A hefty new tax could be a breaking point for many.”

Given the huge amount of research required to determine the effect of a wealth tax the concerned tax group will be asking for an extension, says Dan Foster, tax director at law firm Webber Wentzel.

He says wealth taxes are not necessarily meant to raise lots of revenue, but are a form of social engineering.

“However, for the people that have to pay, it is quite painful. Bear in mind that it will be the middle class who will suffer, as with all taxes.”

Read: Tax revolt: The frustration is growing

Foster, vice chair of Sait’s personal tax working group, refers to several international tax and economic commentators who have already done studies on the positive and negative effects of wealth taxes, and who have done calculations based on the Piketty proposals.

It does show that the revenue gains are not that spectacular, but it seems words like “fairness, equity and sacrifices” form part of the international debate.

Chris Evans, professor of taxation at the University of New South Wales, notes in his 2013 briefing paper on the problems and practice relating to wealth taxes around the world that the member countries of the Organisation of Economic Cooperation and Development (OECD) are among the richest countries in the world.

However, the combined tax revenue of these countries, derived from annual wealth taxes and wealth transfer taxes accounted, on average, for less than 1% of their total tax revenue.

Evans says wealth taxes have steadily declined in recent decades. In 1990 exactly half of the OECD countries had such taxes. By 2000 the proportion was just over one third. And by 2010 such taxes only existed, on an ongoing basis, in France, Norway and Switzerland (at the cantonal level).

Michael Schuyler, a fellow at the US Tax Foundation, compiled a special report in 2014 by using the foundation’s taxes and growth model to determine the outcome of Piketty’s recommended wealth tax.

The basic version of Piketty’s wealth tax would impose a tax rate of 1% on net worth of $1.3 million and $6.5 million and 2% on net worth above $6.5 million. Piketty contemplates additional tax brackets, including a bracket of 0.5% starting at about $260 000.

“Piketty’s claim of fairness is subjective and of prosperity is surely wrong … The Tax Foundation model estimates that the Gross Domestic Product (GDP) loss, expressed in terms of the 2013 economy, would be about $800 billion annually under a two-tier wealth tax of 1% and 2%.”

Schuyler found the estimated loss would rise to about $1 trillion annually if a half-percent bracket on smaller wealth holders ($260 000) were also imposed.

A wealth tax (Piketty style) in the US would depress the capital stock by 13.3%, decrease wages by 4.2%, eliminate 886 400 jobs, and reduce GDP by 4.9%, or about $800 billion.

All for a revenue gain of less than $20 billion, the Schuyler’s modelling exercise found. If the slightly wealthy are also included the GDP loss goes to $1 trillion for a revenue gain of slightly more than $62 billion.

Patrick Stevens, former president of the UK’s Chartered Institute of Taxation, writes in an article – published in 2012 by politics.co.uk – there are several obstacles to administrating a wealth tax.

Someone with a £2 million house may seem well-off but if they are on a low fixed income, as many pensioners will be, finding the money for a £10 000 annual charge (which is what a 0.5% levy would correspond to) may present a huge challenge.

“There is a reason why most taxing of wealth currently takes place at the point it is being transferred –because it is easier then to skim off a portion of the proceeds of a sale,” Stevens says.

Patricia Williams, tax partner at Bowmans and Sait member, says there is an alarming trend in South Africa to seek out implementing multiple alternative tax types.

“They are complex and administratively burdensome to comply with. They are without a cogent overall framework and sensible manner of applying the funds linked to the purported purpose of the tax. That is a key threat with these further tax proposals,” she warns.

Williams proposes an annual wealth tax on trusts, as an alternative to estate duty, would make sense and “tie in” with the rest of the South African tax system. 

She explains that trusts escape estate duty, so an annual tax of, around 0.5% would be equivalent to a duty of 25% every 50 years.

Some of the complications associated with the introduction of a wealth tax include the valuation of assets to determine net worth, what should be included and what should be excluded from determining the net worth and the rate of the tax on the determined threshold.

Thomas McDonnell, senior economist at the Nevin Economic Research Institute in Ireland, says in a 2013 working paper wealth taxes, at least as enacted in Europe, have generally been “incoherently designed” and “incapable of achieving their core objectives”.

A well-designed wealth tax should be related to the ability to pay, should seek to minimise economic distortions, and should be as simple as possible.

“Resisting the inevitable clamour and special pleading of interest groups for exemptions and reliefs will be a constant challenge for policymakers. Yet a viable wealth tax needs to have an acceptable cost yield ratio with low compliance and administration costs,” McDonnell notes.

Foster is weary of additional taxes in South Africa. “Ultimately, South Africa, like all developing countries, needs more growth and not more taxes.”

Taxes lead to wealth destruction, low investment, low returns and low growth and lower taxes collections.

He quotes Winston Churchill who said, “I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle”.

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getting to the point where all wealth is owned by the state and citizens given according to their needs. hmm that sounds pretty socialist to me!

There needs to be a balance between socialism and capitalism. Some people will never do well in a capitalist system and these people need a safety net. If the safety net is too big that will crash the system too, so balance is the key.

Seems like we heading past where wealth/riches made in ones lifetime cannot be inherited without big loss.. to decay thereof within a lifetime.

Yah no.. I’m just finishing more post grad studies (cheaper than aboard) and I’ll be out too. Yes.. in the past I’d be like.. I need to use education to better SA? but why? The risks I need to live with in terms of security & stability which gov fails to provide mean it’s not worth it. And when life in Sa now costs more than in a first world where I can earn many times more and be taxed less.. well you can see why anyone well educated and under 40-45 is leaving.

You might be earning a bit more overseas, but everything costs a lot more overseas as well with the exception of electronics. Do yourself a favor an look up house prices in the UK, Aus, etc.

He or she will be fine. They are young and have many years.

MoneyChief: Life is not all about materialism. Life may be more expensive there, but sometimes the peace of mind, depending where you live of course, is quite gratifying and does wonders to ones stress levels. For example, in many places you can live without owning a motor car as the public transport is far more efficient. No insurance, licenses and storage costs. Ownership versus rental of a house / apartment can be looked at. Easy to adapt to a new lifestyle within an affordable budget. The only thing I have yet to experience anywhere else is the weather and the smell of the bush in SA. Those I would miss.

@Paining. Peace of mind does not come from the outside, it comes from within. Moving to another country is not going to bring you peace of mind.

Although the one thing that has brought me a lot of peace of mind was looking up the crime stats and calculating that the risk of living in South Africa is about the same as smoking one cigarette a day. Nothing to be worried about.

+MoneyChief

Look up waitrose.co.uk a major grocer chain and you will see in many instances food here is more expensive.

Public transport is good and state medical is on par with private here. Housing is expensive but so it is here. Live away from major cities and commute and the house prices fall.

People don’t pay extra for security and Universities are subsidized.

I also don’t see many returnee’s, notably from N. America or Australasia.

@Jerimiah, I lived in the uk for 10 years, it is a LOT more expensive to live there and houses are 5 times more expensive per square meter. Universities are subsidized in South Africa too, in fact students only pay a third of the actual cost. The UK state medical service is not on par with private here. In the uk you have to wait a week just to see a GP and 6 months to see a specialist. Been there, done that, got all the T-shirts.

Finally, go to the website numbeo and do a cost of living comparison between cities here and in the uk, australia and US to get a true picture of cost.

Houses in Australia and UK are more expensive per sqm, but interest rates are low (can be under 2%) so they aren’t as expensive to pay off as they might look. Also, they steadily go up in value (London’s 60-year average is doubling every 10 years) and when they’re paid off they are a huge and valuable asset if you want to move out/downsize and pocket the difference.

Whereas in SA, many if not most houses are worth less than a decent luxury car and with its economic prospects, are likely to remain that way.

My daughter will finish her studies in 2018, an than she is off to. What future do this political environment leave for grads within “radical transformation”? problem is the cream of grads are packing bags, and SA is left with the …?

This is unfortunate, but true.

oh yes – she is a world recognised nuclear physicist? don’t think so – cause that’s what one needs to migrate to the west. THERE IS NOWHERE TO GO!! all the popular places are full. what you have done is abrogate your responsibility to your family esp yr daughter- to provide them with a safe and secure environment to grow up in. 30 years ago it was very easy to move to aus,nz or Canada – not today

Who told her it is a good idea to leave? Let me guess, people who have never been overseas. I am sorry to say this, but the grass is not greener. The radical transformation is to uplift the previously disadvantaged, this does not mean that the previously privileged will have a bad future. The pie is not a fixed size, the more people participate in the economy, the bigger the pie will become. I genuinely feel sorry for people who leave. I’ve seen their disappointment first hand.

@Moneychief…. 100% agree that there are challenges everywhere but its going to be tough to convince the average Whitey Mc White Face that we have a better chance of success in SA than abroad.

Um, no you don’t. I have friends who have nothing more than a Bachelor’s who are now working, and happy overseas. You might not land your dream job, but there are opportunities if you are willing to put in the hard yards.

Moneychief… Really? The pie is being cut into far smaller pieces without growing at a fraction of the same rate. People are losing their patience with the completely incompetent government and the regressive communist mindset of most of our “leaders”. “Radical Transformation” doesn’t mean anything except legitimizes more theft on a greater scale by Zupta and Co.

I agree that it is difficult to leave, but more so because one is often leaving family and friends behind, it is rather expensive, and there will always be a lack of certainty until one is settled.

Dananzi, that is a rather racist generalisation, but probably true to a certain extent. However, fewer people would be wanting to leave if they felt included and were more assured that the policies that the country was implementing and enforcing were for the benefit of all, not just populist rhetoric designed to reward corruption, nepotism and incompetence. Also, it is not just Whites leaving, a lot of middle-class Blacks and Indians are looking for better opportunities overseas as well.

I’m not saying there are not opportunities in SA, but when you encounter resistance and negativity in most places you turn it is difficult to maintain one’s optimism.

Why is no-one talking about earning forex rather than ZAR? That to me is the whole point. Yes, the cost of living overseas is higher and sure, we may need to compromise on some of the things we take for granted. But to remain here earning a Mickey Mouse currency that is on a slow and steady path of depreciation with little to no prospect of improvement all the while the government use legal means to confiscate my hard earned over-taxed ZAR….no thanks. PS I’m leaving SA and above all, I will miss the bush, friends and family – that’s it.

It will be known as the emigration tax once everyone with more than R100.00 has left for a better and safer life elsewhere.

and exactly where would that better and safer place be, Sweetpea

Any place that has a modern and safe banking system. The whole of Europe, Canada, the USA, Australia, New Zealand, just to name a few places. Just why would I want to hand over any money to a government that is know to be corrupt and who has been irresponsible with the money already paid into the exchequer? Money that has already been taxed before should not be taxed a second time. Just because someone in government thinks I have too much does not give them the right to dip into my pocket. Then it is safer to leave the money elsewhere but still on my name. What would be the logic of leaving money in South Africa if one knows it can be snatched at the will of the government?

I’ve said this many times before – clearly need to say it again – NO ONE GOING NOWHERE! The “house full” signs are going up in all those places mentioned as places to live out yr lives. In Aus govt just removed 457 visas, NZ upped their points, UK doing Brexit to stop migrants etc etc. time to face reality

@robertinsydney

Re: brexit “stopping migrants”…I suggest the reverse will happen for immigrants from outside the EU.

This is because current rules are extremely tight on immigration from outside the EU because there has been no ability to control numbers from inside the EU so they have squeezed the only group they can. It is well known in the UK that this is counterproductive and done for populist reasons.

Once the EU numbers are hugely reduced after Brexit, there is scope to increase numbers from outside the EU. Most Brits have no problem at all with Saffa, Aussie etc emigrants – because they can relate to them and they fit effortlessly into the landscape. London needs much more talent than the UK can supply and they will start to open doors again.

@GTECH

suggest you consider why uk is leaving brexit. major reason is immigration. the uk is full – there is no way they will be allowing increased immigration from the old commonwealth countries – which of course include places like india, Pakistan, jamica etc etc – get the picture!

just remember the current immigration law goes back to when uk WASN’T in the EU

://en.wikipedia.org/wiki/Commonwealth_Immigrants_Act_1968

anyway who in their right mind wants to live in the uk!

@robertinsydney

I didn’t say they’d be increasing from “old commonwealth countries”. I said Saffas and Aussie fit easily into Society and don’t cause resentment. UK rules will likely be relaxed to make it easier (not easy) for professionals in fields in demand can work here.

And everyone to their own. I lived in Australia in the 00s, in Melbourne. I still have a permanent residency visa. But I was happy to leave for brighter lights because in spite of liking the Aussies I was so bored of the sheer emptiness of life there if you aren’t into sport 24-7.

@GTECH

really hope you kept your property in Melbourne. the growth there and in Sydney has been “mind numbing”. personally can’t stand Melbourne – and yes it is big in sport. also it is a 2 hour drive from the sea. we are TEN MINUTES from the pacific where we live next door to manly. my ideal holiday was driving across Australia – took 7 days. also the india-pacific train is incredible. just love the empty spaces outside the major cities

Government’s paranoia about trusts have gone overboard. For a young family with minor children their worst case scenario is what would happen in case both parents die simultaneously in a car accident. What will happen to their children? They could make other people beneficiaries of their life insurance policies but we all know that the money may be spent on the wrong things and the children may never go to university. That is where a trust works well because one trustee has to be an independent outsider like an attorney who has a fiduciary duty. If Government can solve this problem, I will listen to what they have to say, but I don’t think they can.

Sweetpea. A government that is actively targeting you and your family.

then the answer is to get rid of the government and vote some people in that will be more honest and steal less from their citizens.

Agree. Fortunately, in some ways, my wife wears the pants at my house when it comes to financial matters. She has a certified financial planner (also female, which I find reassuring), who organised most of her funds to go off-shore via a “life wrapper” through Investec. More importantly, she introduced us to a very clued-up attorney /fiduciary expert who was aghast at the fact we had no independent Trustee for “our” family trust. It cost us quite a lot to reorganize, but it was done, and new Wills drawn up for us and our unmarried daughter all included in the price. And his firm has access to bookkeeping, accounting and tax experts. Well worth the price.

shudder to think of the fees you paid for this “made up” structure. it will fail at the 1st hurdle regarding an independent trustee. I deal with it thru my practice – just can’t do it. also interested to know what investments you have discovered you are invested in. guarantee they are not Amazon, Google etc etc. and just wait till you try access your funds – a’int going to happen. here is this product – words fail me -https://www.slideshare.net/ImaginAttic/investec-offshore-estate-planning

@robertinsydney. Shudder all you want, Bob. You have NO IDEA what our investments locally and overseas comprise. I’m not going to tell you anything except it’s NOTHING to do with the link you so kindly supplied me with. Stick to your own problems, which seem to be immense judging from all your negativity. Yes, we (whites) still in SA have problems to face. The intelligent ones have ways to solve most of them – I and my wife are included in that group.

you should also consider your grammar – “my wife and I”!! also see my statement on the use of trusts further down. suggest you do some background reading – can start with reading one of the excellent books of the panama papers.

There are so many inequitable aspects of wealth funds it’s hard to know where to start. For instance, will they also tax the capital value of pension funds each year? These are often an individual’s single most valuable asset. And if they don’t, why should someone who has saved their way to a retirement pot in a different vehicle (possibly a trust) be treated differently?

What pension? They are already empting the government pension and private pensions are next.

This is when you take out an offshore life insurance policy for your kids with an offshore trust as the beneficiary…which will then look after your kids.
Expect this kind of business to boom in the future…until the government tries and stops it as well.

Once we understand that “Wealth” or “capital” are simply other words for purchasing power — the ability to acquire what one wants (including investments), it becomes obvious that SA’s problem is not that 3.8 million taxpayers earn more than R500,000 a year but that 17 million are on social grants, in other words incapable of earning enough to buy the basic necessities, but rely upon the state to “transfer” that wealth.

The problem is partly structural, in SA the barriers to entry for new entrepreneurs and job-seekers are enormous but mainly systemic: apart from direct corruption the indirect corruption in education (from pandering to teachers’ unions to text-book non-delivery) resulting in the majority of SA’s youth being unemployable or uncompetitive. This has been compounded by the government-of-the-day having one of the more business-hostile attitudes aggravated by racism directed against the “haves” in terms of social, economic and especially skills capital.

The knock-on effects include a brain drain and investment strike resulting in long-term capital exiting, skills being depleted, poor productivity, bad “wellness” & social indicators, increasing resentments on both sides of the various “gaps” including entrepreneurial malaise — in short, a squandering of the “Wealths of the Nation”, that is, its economic, social, political and skills capital. Being an economy based upon depleting resources (minerals) only adds to the urgency as the lumpen “Wretched of the Earth” get left further and further behind.

The cure is to end the legacies of apartheid and corruptheid, beginning with becoming serious about fighting crime, from the Presidency, to the “state watchdogs” to the skollies and tsotsies on the street and treating SA’s dysfunctional education (far worse than Verwoerd could have fantasised) as a National Emergency. The ZANC knee-jerk reaction of more regulation and command-and-control is NOT the solution: in the USA Sarbanes-Oxley was introduced in response to “Enron” and did not prevent (more likely contributed towards) the 2008 toxic mortgage crash or Madoff scam.

“For evil to succeed it is sufficient that good people do nothing”
Last months’ anti-corruption marches were a good beginning; if everybody who participated gave half the time every month, contributed, say, the cost of one evening out to an opposition party we could be rid of the Zumafia in 2019, just as they “kicked the bums out” in three major metros in 2016.

The alternative is too ghastly to contemplate.

Folks it is time. Atlas may have shrugged but it is time that those carrying the nation no longer turn the other cheek. This is it, this is war. The ANC are intent on pillaging the wealth of the nation until everyone is reduced to a state of absolute penury while the politburo live in opulence. These people are nothing but common thieves looking for their next avenue of plunder having milked the existing ones dry.

Ironically countries having adopted crazy leftist ideals is not always a bad thing. Historically these ideals have played out and left a wholesale legacy of disaster, misery and ruined lives in their wake- we can certainly learn a lot. There are more precedents than one can imagine. What is being suggested amounts to a very bad idea. Confidence collapse, business bankruptcies, exacerbated unemployment, capital flight, poverty, hunger, empty shelves and a valueless currency. Will this be the legacy of the ANC like ZanuPF? At this rate an emphatic “yes”.

Socialism is not a good idea that did not work out. It is a thoroughly bad idea that did work out exactly as planned. It is not based on mutual consent but brute force at the end of a barrel of a gun. It is morally reprehensible and selfish – I breathe therefore you owe me as I have inalienable “rights” bestowed on me by the folks with the guns- the ANC regime. Capitalism is altruism. I create something of value in exchange for something you have.

Davis is a traitor and needs to be known for what he his. Anyone who bases their tenets on the vile but thoroughly debunked Pikkety has tipped his hand. We know who the enemy is. The fact that society has to be transformed and wealth redistributed removes any incentive to create it. The left is about equality of outcomes not opportunity. Except for the ruling class, of course.

Can you imagine if Bill Gates called it quits after making $500K as anything else would have been stolen via taxation?

Who has done more for the world and added to the lives of billions, one of the great entrepreneurs (Gates, Zuckerberg, Jobs, Musk, Bezos etc) or Mother Theresa ? Sure Mother Theresa did great things but my money ain’t on her.

Sometimes in life we can learn things the easy way. Other times the hard way. One likes to think the propensity of repeating others’ disastrous mistakes, precedents in evidence, would be a simple inverse function of intelligence. On this basis the ANC are not very smart. Not at all. Less so those who voted for them.

Davis is an academic, they are all a bunch of leftists that have never worked in the real world. His salary also gets paid by the government (mostly anyway).

As in most things (except climate change!) I agree fully with what you say, RTG. Piketty is just a Karl Marx in disguise who simply does not get the picture of what capitalism means. He is an ingrate who does not deserve public notice. An LSE background is a fertile breeding ground for commies – always was, always will be.

Piketty does not know that the ANC collects far too much money but it is wasted and stolen.

Absolutely brilliant.

The comments on the chief tax collaborator are spot-on. Hopefully all readers know what eventually happens to traitors.

They will turn on him as well.

Not just the wealthy. How many people can barely pay for a char or gardener? Time for the family to reconnect and do these jobs themselves. Could be good family time.

If they stopped the waste, theft and corruption we could all get a tax cut. NOT an increase. And there would be enough for free schooling then.

All the good people at SARS are gone. They even outsource debt collection, another SARS scam.
Stop efiling and ask for paper form and just like the SABC they will have no idea, who is who.

Why are you making it easy for the legal criminals to rob you?

Watch out for the Law of Unintended Consquences! Possible conseuqences include
1. More wealthy and middle income emigrating, taking skills and money out of an already small pot
2. People hiding assets
3. People spending more (in a country not known to be good at savings and where savings/invetsments will be sorely needed of more downgrades are on the way)…why not just spend what you earn, if the government is going to take even more of it away

Will the above benefit the country?

“I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle”,… but in SA the ANZ found a way to remove the bottom from the bucket(corruption), and lifting it up, called it “radical economic thinking”.

Lets summarise: Taking,..no..stealing from those who HONESTLY worked for their money (notice the dishonest property syndication companies recently in the news are excluded) to feed the poor (stealing the fisherman’s fish instead of teaching the taker to fish) historically NEVER worked!
In fact some of the biggest capitalists, such as China, Russia etc, were previously communists, socialists, etc.
If you want more then a piece of bread you have to be a capitalist willing to learn and work hard…nothing is for nothing. If they want to look at fair taxing then they should look at hidden money like Trusts. SLIGHT scaling adjustments for earners in excess of R400k p/year up or non burdened capital of R13mil up is an option. (By the way I’m..hopefully..a middle income well below this category.

So you are ok with stealing as long as it is not from you?

How is money “hidden” in a trust?

Please do explain.

that’s what I am trying to explain to #phil99 – that what he has been sold is a pup. trust law goes back to the days when the crusaders were leaving their lands in Europe to fight for the holy lands in the 11th century. since that time trust law has been brought into mainstream legal and taxation law. the most famous trust these days is the one that protects the duke of westminister’s property holdings in the uk. assets CANNOT be hidden in a trust. if money is given to a trust then someone is owed money by that trust. attempts can be made to place numerous levels of ownership but ultimately someone has a claim on that money. suggest you google “panama papers” for the full story of “hiding” money in trusts. doesn’t work and only people making money are the lawyers, accountants and the investment institutions receiving these funds at the expenses of people like #phil99

Dear Editors

I would like to know on what grounds my post of yesterday evening was not allowed, so that I can know what your policy is.

Regards

Jan Buurman

I am surprised – I have made numerous comments on this page and not ONCE was it not posted. can only assume you breached the racist guidlines – which I never have!!!

Re wealth tax. Your examples are of the first world, which South Africa is not. SA is in transition with severe structural restrictions. The Gini factor is almost the worst in the whole world. We have a very high unemployment rate, which is a direct reslut of the low educational skill levels. Therefore the redistribution of wealth is not the answer, because the absence of skills menas that the money will be spend on consumer goods and not on investment. This implies that it would be counter-productive (literally so) with a drop in economic growth and a negative spiral of unemployment. What is required is a massive effort to train and educate the population. How to do this? The Truth and Reconciliation Hearings did not recommend an retribution tax. It was a chance lost. What I propose is tax credits for taxpayers who carries the cost of the education and/or training of disadvantaged children. (a similar method as that used for medical tax rebates.) On an gross income of R1 million such a rebate of (say) 5% would mean R50,000 available to students of pre-school, primary,secondary and tertiary institutions. It is important that the funds will not disappear into government revenue and wasted on other wasteful expenditures. Clearly such an scheme will have very positive social and economic benefits, without the negative of high-earning taxpayers leaving the country of scaling down their enterprises. This is the principle, which obviously must be refined by the legal and tax professional.

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