Super tax mooted for rich

By Staff Writer

A super tax on the wealthy could be a possibility as the government looks for funds to bolster its expenditure mandate that it set out in 2012 and attempts to address the inequality and poverty within South Africa. “Once again, a super tax on the wealthy is being mooted, as it was last year, on the assumption that such a tax would be regarded as going some way to addressing poverty and inequality in South Africa, in line with the Minister of Finance’s programme of economic change,” said Marteen Michau, head of fiduciary and tax at Sanlam Private Investments (SPI).


Michau explained that given the disparities highlighted in the recent census, a tax increase on the higher earners in South Africa is inevitable. However, speculation is still rife about how this tax hike on the rich may be enforced. “This might take the form of an increase in the inclusion rate for capital gains tax; alternatively, an increase in the marginal tax rate applicable to the highest income earners might be on the cards,” said Michau.


The 2011 Census showed that white households earned about six times more a year on average than black households. It also showed that female headed households earned far less compared to their male counterparts.


A global trend
Experts at Deloitte agree that the finance minister could focus on taxing the wealthy but added that this would be necessary to address fiscal revenue needs. “SARS has approximately 2300 high net worth individuals on its register, yet it expects this figure to be higher, with the tax contributions of these individuals still perceived by SARS as being too low,” said Deloitte director, Luke Barlow.


Barlow added that a tax on the wealthy was not an uncommon solution and argued that it may again not come into fruition. “We expect Government to follow the global trend of more onerous taxation on the wealthy as a means to level out the inequality of income levels in the country. However, with wealth taxes in the form of capital gains tax and estate duty already in place, we believe it’s unlikely the Budget will introduce another wealth tax just yet,” he said.


Clampdown on evaders
Tax evaders will have fewer places in which to hide as a clamp down on tax evaders is expected as well. “There remain questions over whether SARS can sustain the success of the tax base it has built up since 1994. This will more than likely give rise to tighter compliance measures in the Budget this year in order to make an example of tax evaders,” said Anthea Scholtz, fellow Deloitte director and corporate, expatriate and employee’s tax specialist.


It’s unlikely that we will see much innovation when it comes to tax predicts Le Roux Roelofse, a fellow director at Deloitte. “There is a limit on the level of taxation that Government can introduce into law. We are therefore much more likely to see Government focus on compliance as a means to increase revenue and are expecting them to really crack the whip in this regard,” he said.


Relief for small businesses?
Small businesses may get some relief this year. “The cost of tax compliance is a significant challenge for SMEs as it can be regressive. It may be a relatively minor burden for larger companies, but is an extremely onerous burden for SMEs,” explained Scholtz. “In South Africa and in particular in the Western Cape, the SME sector is critical to the achievement of our country's targeted employment figures and economic growth. It is therefore imperative that Government provide some form of relief to this sector in order to stimulate its growth further.”
 

Recent Articles

Featured Tax free savings accounts – Which offer you the best value?

This week Justmoney compares TFSA’s across the five banks mentioned to see which bank allows for the most savings potential and which is cheaper to utilise.

Read more

Are you liable for your spouse’s debt?

Marriage may signal taking on someone’s last name, family, and even traditions. But are you signing up to be liable for your spouse’s debt too? And if your life partner is made redundant or fired, will you be responsible for your spouse’s debt?

Read more

What happens to your medical aid when you move overseas?

While exploring a different country, you may rely on the built-in travel insurance that forms part of your medical aid. However, what happens when you stay for longer than a typical vacation? This week Justmoney has a look at what you should do with your medical aid if you decide to move overseas for a period of time.

Read more

How to apply for government funding for your start-up business

Starting your own business can be challenging, especially if you don’t have the capital to get it off the ground. Fortunately, there are many ways to fund a new business in South Africa. This week Justmoney found out more about these grants, how to apply for them, and what you can do to make your business stand out from the rest.

Read more

Sign Up

To our weekly newsletter for advice you can bank on

Deals

Free MBA Course

Price: Free
When: Applications close on 31 May
Where: Online

The 41 Winter Special

Price: From R170
When: Weekdays
Where: Cape Town

KFC Burger Day Special

Price: R97
When: Until 28 May
Where: Online