Fin24 – 10 May
Tim Mertens, chairman of Sovereign Trust SA
Cape Town – If a series of wealth taxes were imposed in South Africa in the short term, this would likely have a further negative impact on investor sentiment and add to the already high tax burden that the wealthiest sector of society is subject to, according to Tim Mertens, chair of Sovereign Trust.
Wealth taxes are ancillary taxes raised often on the annual value of capital assets; on an estate when a taxpayer dies in the form of an estate duty; and on other financial transactions such as donations tax, stamp duties and securities transfer tax.
The Davis Tax Committee has reviewed a possible wealth tax and has concluded that this is probably premature in an anaemic economy, Mertens explained.
However, he believes various forms of wealth tax will likely be introduced over time. These could include potential estate duty rates and bands, and possibly other taxes such as transfer duty and donations tax as possible targets in the future.
“Taxing the wealthy even further would erode wealth, which would in the longer term be more detrimental than better managing the tax revenues being able to be generated at present,” he told Fin24.
He explained that annual levies on property values, transfer taxes, high estate duty or inheritance taxes and capital taxes are common wealth taxes imposed by countries in Europe and the United Kingdom, where there are welfare and other social commitments to support.
Read the full article here.