FLIGHTY FIX

South Africa: Why a wealth tax won’t bridge the inequality divide

By Xolisa Phillip, in Johannesburg

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Posted on December 2, 2022 16:03

© A general view of informal settlements and other parts of Khayelitsha, home to millions of people in mostly impoverished circumstances, with the back of Table Mountain visible, about 35km from the centre of Cape Town on February 22, 2022. (Photo by RODGER BOSCH / AFP) — A general view of informal settlements and other parts of Khayelitsha, home to millions of people in mostly impoverished circumstances, with the back of Table Mountain visible, about 35km from the centre of Cape Town on February 22, 2022. (Photo by RODGER BOSCH / AFP)

The argument by the Organisation for Economic Cooperation and Development (OECD) that tightening South Africa’s wealth tax regime would rebalance generational inequality has a fundamental flaw: it targets a “flighty” base, says an expert from the African Tax Institute.

Furthermore, such taxes are expensive to administer, Sansia Blackmore tells The Africa Report. Blackmore holds a PhD in tax policy and is an academic at the institute.

Economists Isabell Koske and Falilou Fall, from the OECD, make the case that there is scope to reform South Africa’s wealth taxes framework, while also advocating for an upward adjustment of the country’s value-added tax (VAT) rate.

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