Abstract
The purpose of this study was to assess whether value-added tax (VAT) on luxury goods could be implemented in South Africa. In particular, in light of the requirements of a “good” VAT and applying the canons of taxation, the study focused on determining the amount of tax revenue that could be raised. Taking into account the requirements for a good VAT, international tax regimes that apply luxury goods VAT or consumption tax were identified. The suitability of these taxes in the South African context was investigated. Having identified a tax regime that was suitable in South Africa, a quantification was performed to determine the tax revenue that could be generated from the luxury tax. The findings indicate that while a fair amount of revenue could be generated, it would not be sufficient to address the South African tax revenue shortfalls. The study shows that a good case for the introduction of a luxury VAT in South African is not currently plausible.