At the same time, the concentration of a society’s wealth in the hands of a few reduces the mobility of wealth.
Given that there are direct benefits from the holding of wealth , we argue that wealth is a legitimate tax base in its own right.Wealth inequality in South Africa is not only intolerably high, with Gini coefficients of 0.93 in 2010/11 and 0.94 in 2014/15, it is also not reducing. Wealth inequality is much higher than income inequality and significantly higher than global wealth inequality.
It’s a challenge to economic development when the bottom 80% of the population own no wealth, especially when a vibrant middle-class is a key ingredient in economic progression, as evidenced in advanced economies.that much of the economic success experienced in advanced economies in the 20th century has been as a result of increased ownership of assets among the middle-class. This is certainly not the case in South Africa.
This will allow an assessment of who owns what by making wealth disclosure mandatory for all citizens. This will create an environment of transparency and over time will provide a much clearer picture of the net wealth tax base in South Africa. It would also allow further analysis to help set an effective wealth tax rate that does not promote tax migration and capital flight.
Assets which lend themselves to easy valuation and which could be taxed under a net wealth tax include fixed property. This is already taxed at local government level but could attract an additional national tax. The OECD also supports the idea of taxing property because taxing property has less distortionary effects when compared to other wealth taxes.
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