South Africa Weighs Wealth Tax as Budget Talks Continue

The South African government is exploring the introduction of a wealth tax as part of its revised budget discussions, according to reports from Business Day. The proposal was considered during a cabinet meeting on Monday, following last week’s postponed budget announcement.

Why Is a Wealth Tax Being Considered?

Finance Minister Enoch Godongwana was forced to delay his annual budget speech due to disagreements over a proposed increase in value-added tax (VAT). Raising the VAT rate was expected to generate R191 billion in revenue by 2028. However, resistance to the tax hike has prompted the government to explore alternative revenue sources—including a possible levy on wealth.

The National Treasury previously signaled its interest in taxing wealth and is working with the South African Revenue Service (SARS) to assess the levels of wealth declared to the tax authority. While no final decision has been made, the discussion marks a significant shift in South Africa’s approach to taxation.

Political and Economic Implications

The Democratic Alliance (DA), the second-largest party in the coalition government, is set to present its alternative budget proposals on Tuesday. As the debate unfolds, business leaders and taxpayers are closely watching how the government plans to balance revenue generation with economic growth.

Finance Minister Godongwana is scheduled to present the revised budget to Parliament on March 12. Whether a wealth tax will be included in the final plan remains to be seen, but the discussion signals a potential shift in South Africa’s tax landscape.

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