The Davis Tax Committee is headed by Professor Dennis Davis.  I had the pleasure of having him lecture me when I was at Wits University and I have to say he is an incredibly smart man.  That is not something that most wealthy people are going to enjoy and I do hope, while convening his Tax Committee on taxes for the wealthy, that he thinks about the damage that too many taxes on too few can do as well.  It is quite obvious where they will be looking, to some extent, because in the press release they issued in May they say that estate duty, transfer duty and donations tax are the only wealth taxes at the moment and they contribute only 1% of tax revenue. 

In other words, they must be considering increasing estate duty, transfer duty on houses and donations tax as well.  They also say though that they like to look at a number of possible forms of wealth tax, including – land tax, a national tax on the value of property over and above municipal rates and an annual wealth tax.  Many countries have taxes on property.  It is quite common in America where, for example, and the rate would vary from city to city and from state to state, but it would often be that whatever the value of your house is, as assessed by the local government, you pay 2% taxes a year.  That is obviously one of the considerations they are looking at, which will affect more than just the wealthy, depending on what amounts they bring in with that.  If, for example, they bring in a 1% tax per year on the value of somebody’s house at R500,000, then if your house is valued at R800,000 you will pay R8,000 a year in property tax.  I just give that as a complete random example, but it gets more expensive as your property value goes up.  An annual wealth tax on top of the top rate of 45%, which we already have, sounds astounding.  I cannot imagine what else they would require, but I have a very good feeling what is going to be defined as wealth will be any amount earned above R1,5 million a year.  

My problem with most of these taxes, apart from the damage they do to the economy and the people they chase away, is that there is such high tax evasion in some places that, for example when I was living in Dainfern and Blair Atholl golf estates, numerous people boasted about how they were paying minimal or no tax at all.  There is an absolute culture in South Africa of tax avoidance by many and that is something I will deal with in another blog article at another time.