Abstract
M.Com. (Taxation)
South Africa is a country with one of the largest inequalities in the world in terms of the gap between rich and poor and the standard of living between employed and unemployed citizens. It seems that the purpose of so-called wealth taxes is aimed at generating more income for government, in order to provide better and more affordable facilities, infrastructure and services to all people. This requires a reform of the income-tax system in ways to reduce inequality in tax collection and to relieve poverty, which would help to narrow the gap between rich and poor. Currently, the South African government struggles to comply with all its responsibilities, due to a combination of ever-changing political, economic, social and environmental circumstances. As a result, government needs to put in place an effective and efficient tax system, in order to collect revenue and to comply with its responsibilities.
This study focuses on determining whether or not the implementation of a wealth tax would make economic and social sense in South Africa, by looking at key determinants such as the growth rate, the unemployment rate and the percentage of the population living below the poverty line. It outlines a clear understanding of the behaviour of taxpayers in regard to a wealth tax system. The study argues that the tax authorities should try to balance the envisaged tax structure somewhere between the six principles they wish to achieve and the behaviour of taxpayers, in order to achieve an optimal tax structure. To develop these arguments, the study has adopted a qualitative and theoretical research approach...