Finance Minister Enoch Godongwana has firmly dismissed the idea of introducing a wealth tax to address South Africa’s budget shortfall, arguing that the country already has multiple mechanisms to tax high-net-worth individuals effectively. Responding to a parliamentary question from MK Party MP Sanele Mwali, Godongwana highlighted that existing taxes—such as estate duty, capital gains tax, and property levies—already contribute over R20 billion annually. He warned that a wealth tax could drive wealthy individuals and their investments out of the country, harming economic growth.
The minister pointed to international examples where wealth taxes failed due to high administrative costs and capital flight. Only four countries still impose such taxes. Instead, Godongwana emphasized that South Africa’s progressive income tax system, with a top marginal rate of 45%, remains the most efficient way to generate revenue. He also cautioned against increasing corporate tax, noting that companies might respond by cutting investments or shifting profits abroad, ultimately hurting workers and consumers rather than reducing inequality.
Godongwana stressed that South Africa’s low savings rate (13.7%) would worsen if a wealth tax discouraged saving. Instead, he advocated for broadening the corporate tax base and improving compliance, including through the upcoming global minimum tax for multinationals. His stance reflects a balancing act: maintaining revenue streams without stifling investment or triggering financial emigration among the wealthy, whose businesses and taxes play a key role in the economy.