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South Africa’s ruling African National Congress has revived plans to introduce a new tax on the wealthy to fund its basic income grant, Johannesburg-based Sunday Times said, citing an interview with Mmamoloko Kubayi, the party’s head of economic transformation.
The proposal, which was first mooted at the ANC’s national conference in 2017, calls for an appropriately structured wealth tax, possibly linked to a land tax, to promote equity and raise revenue, the newspaper said. The target should ideally be the top 5% of high net worth individuals, and estates with significant assets, Kubayi is quoted as saying.
According to the Sunday Times, some economists see a properly structured wealth tax raising as much as 160 billion rand a year. The income would be used to fund the 350 rand social relief of distress grant, which introduced at the beginning of the Covid-19 lockdown, and has been extended for another year.
The National Treasury has argued that the plan is unaffordable, while private sector lobbies including Business Unity South Africa and Business Leadership South Africa have proposed a 200 basis point increase in value-added tax to 17% as an alternative.
Kubayi insisted that a wealth tax is the only acceptable option as an increase in income tax or VAT would weigh on already overburdened taxpayers. She however wants the grants to be conditional and linked to some form of work or skills development program.
The comments come as the governing party’s national policy conference sits for a third day at the Nasrec center in Soweto near Johannesburg Sunday. The ANC gathered on Friday to set its policy objectives for the next five years. Among the policies it will discuss is the progress made on a 2017 resolution calling for the nationalization of the central bank.