The Davis Tax Committee was requested by the Minister of Finance to inquire as to whether it would be appropriate to introduce additional forms of wealth taxation and the feasibility of doing so. Currently, South Africa has three forms of wealth taxation, namely estate duty, transfer duty and donations tax which together bring in about 1% of tax revenue. Capital Gains Tax (CGT) is considered by some to be a form of wealth tax but the DTC has taken the view that CGT is a form of income tax. In light of this, the DTC invited submissions the following possible forms of wealth tax: A land tax; A national tax on the value of property (over and above municipal rates); An annual wealth tax. In this submission, FMF argues that the idea of a land tax has been shown to be unworkable for a variety of reasons and attaches a critique of land tax by Zachary Gochenour and Bryan Caplan at George Mason University, USA.
On the notion of a national tax on the value of property, FMf argues it cannot fail to impinge on the revenue raising capabilities of local governments and will increasingly be borne by black South Africans, who were prohibited from owning property in land for a period of 78 years are now becoming property owners.
See FMF’s submission here
