A Wealth Tax for South Africa

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dc.article.end-page31
dc.article.start-page1
dc.contributor.authorChatterjee, Aroop
dc.contributor.authorCzajka, Léo
dc.contributor.authorGethin, Amory
dc.date.accessioned2022-12-21T10:35:36Z
dc.date.available2022-12-21T10:35:36Z
dc.date.issued2021-01
dc.departmentSouthern Centre for Inequality Studies (SCIS)
dc.description.abstractThis paper considers the feasibility of implementing a progressive wealth tax to collect additional government revenue to both reinforce fiscal sustainability in the wake of the COVID-19 crisis and reduce persistent extreme inequality in South Africa. Drawing on our new companion paper, we first identify the tax base and discuss the design of potential tax schedules. Testing alternative tax schedules, we estimate how much additional revenue could be collected from a progressive tax on the top 1% richest South Africans. Our results show that under conservative assumptions, a wealth tax could raise between 70 and 160 billion Rands—1.5% to 3.5% of the South African GDP.We discuss in turn how sensitive our estimates are to assumptions on (1) mismeasurement of wealth and (2) tax avoidance and evasion, based on the most recent tax policy literature. We examine technical issues related to the enforcement of the tax, and how third-party reporting and pre-filled declarations could be used to optimize measurement of taxable wealth and minimize evasion and avoidance opportunities. Finally, we explain how this new tax could interact with other capital related taxes already in place in South Africa, and discuss the potential impact on growth.
dc.description.librarianES2022
dc.description.sponsorshipSouthern Centre for Inequality Studies (SCIS)
dc.description.sponsorshipUniversity of the Witwatersrand
dc.facultyFaculty of Commerce, Law and Management
dc.identifier.urihttps://hdl.handle.net/10539/33931
dc.language.isoen
dc.orcid.id0000-0002-4962-7512
dc.orcid.id0000-0002-8338-5270
dc.publisherSouthern Centre for Inequality Studies (SCIS)
dc.publisherUniversity of the Witwatersrand, Johannesburg
dc.relation.ispartofseriesSCIS Working Paper; 14
dc.rights©2021 Southern Centre for Inequality Studies (SCIS)
dc.schoolSouthern Centre for Inequality Studies (SCIS)
dc.subjectWealth Inequality
dc.subjectWealth tax
dc.subjectFiscal sustainability
dc.subjectCOVID-19 crisis
dc.subjectMismeasurement of wealth
dc.subjectTax avoidance and evasion
dc.titleA Wealth Tax for South Africa
dc.typeWorking Paper
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