Current economic conditions in South Africa may result in the introduction of a “supertax” on wealthy individuals.
This is according to Nazrien Kader, head of taxation services at Deloitte, who said the coming tax year will be a “watershed year” for tax hikes.
Kader was quoted by Moneyweb as saying that the country’s “economic growth prospects have deteriorated considerably”, and that revenue collection could come under pressure as a result.
“I think the challenge to [the finance minister] is to generate taxes without penalising growth or exacerbating inequality,” said Kader.
Supertax in South Africa
Personal income tax, VAT, and corporate income tax are the biggest financial contributors to the state, stated the report.
Kader said a supertax bracket may be reintroduced, which will see high-income earners pay 43% to 45% tax.
Currently, those with an annual income of above R701,300 pay a rate of 41% on their taxable income.
“A supertax was also levied in the 1980s, but the bracket was adjusted downwards after a recommendation by the Katz commission,” said Moneyweb.
The rate will likely be lowered again within three years, as South Africa’s finances stabilise, said Kader.