Finance Minister Enoch Godongwana has drawn a clear line in the sand: South Africa will not be introducing a wealth tax in the new national budget.
Godongwana said that the idea is not just economically unwise - it’s potentially dangerous.
The minister will deliver his revised national budget - his third one this year - next Wednesday, 21 May.
The ANC member’s firm stance comes in response to mounting pressure from opposition parties, particularly the Economic Freedom Fighters (EFF) and uMkhonto weSizwe (MKP) party.
Both have proposed a wealth tax as a more equitable alternative to increasing value-added tax (VAT), which disproportionately affects the poor.
In a written response to a parliamentary question by MKP, Godongwana dismantled the proposal with pointed economic reasoning.
A wealth tax, he argued, risks triggering a chain reaction with far-reaching consequences.
According to the minister, taxing high-net-worth individuals on their assets.
Additionally, he cautioned that many people will decide to either relocate their wealth—and possibly themselves offshore.
According to data from the South African Revenue Service (SARS), there are roughly 2 850 people whose net worth exceeds R50 million.
This group collectively owns R245 billion in local assets and R150 billion offshore, and they pay roughly R7 billion in personal income tax each year, including returns from their overseas holdings.
He said in his reply: “Should this group decide to relocate, it would impact negatively on capital and investment flows, as they often have business interests which generate employment and contribute towards economic growth and capital formation locally.”