Navigating the Taxation of Wealth: Insights from theory to international experience

The document argues that wealth taxation is an appropriate tool for redistribution in South Africa due to extreme inequality, where the richest 0.01% owned 15% of wealth in 2017. It examines three primary instruments: Financial Transaction Taxes (FTTs), dividend taxes, and net wealth taxes. International evidence from France shows that increasing dividend taxes from 15.5% to 46% led to a 15% increase in investment. Net wealth taxes in countries like Argentina, Spain, Norway, Switzerland, and Colombia have raised between 0.2% and 1.5% of GDP. The brief highlights administrative challenges for the South African Revenue Service (SARS) but notes the existence of a High Wealth Individual Unit as evidence of feasibility. It recommends a combination of moderate net wealth taxes, increased dividend taxes, and the introduction of an FTT, supported by tighter capital controls and international cooperation via the UN Framework Convention on International Taxation and Cooperation.

• South Africa exhibits extreme wealth inequality, with the richest 0.01% of the population (3,500 individuals) owning 15% of the country's wealth as of 2017, a share exceeding that of the bottom 90%.
• Financial Transaction Taxes (FTTs) can generate consistent revenue and reduce market volatility. In France, an FTT implemented in 2012 has generated an average of 1.4% of total revenue and reduced market volatility, leading to more stable investment flows.
• Increasing dividend taxes can encourage corporate reinvestment over shareholder payouts. In France, raising the dividend tax from 15.5% to 46% in 2012 resulted in a 15% increase in investment and a 16% average decrease in dividend payouts.
• Net wealth taxes have been used globally to raise revenue during crises and address inequality, typically generating between 0.2% and 1.5% of GDP. For example, Argentina's once-off solidarity wealth tax targeting the wealthiest 12,500 individuals raised approximately $2.4 billion.
• The effectiveness of wealth taxes is heavily dependent on administrative capacity and enforcement. France's Solidarity Wealth Tax collected only €5.1 billion, which was four times less than the expected €20 billion, due to high thresholds, lack of enforcement, and wide-ranging exemptions.
• While critics argue that the South African Revenue Service (SARS) lacks the resources for a wealth tax, the establishment of the High Wealth Individual Unit (HWI) suggests feasibility; this unit monitors 2,800 individuals with approximately R460 billion in local assets and R150 billion in offshore assets.

APA

Etkind, R., & Mncube, Z. (2025). Navigating the Taxation of Wealth: Insights from theory to international experience. Institute for Economic Justice. https://iej.org.za/wp-content/uploads/2026/03/IEJ-PB-WealthTaxes2025-web.pdf

Chicago

Etkind, Roger, and Zimbale Mncube. Navigating the Taxation of Wealth: Insights from theory to international experience. Institute for Economic Justice, 2025. https://iej.org.za/wp-content/uploads/2026/03/IEJ-PB-WealthTaxes2025-web.pdf.

Wikipedia

{{cite report |last1=Etkind |first1=Roger |last2=Mncube |first2=Zimbale |title=Navigating the Taxation of Wealth: Insights from theory to international experience |publisher=Institute for Economic Justice |date=December 2025 |url=https://iej.org.za/wp-content/uploads/2026/03/IEJ-PB-WealthTaxes2025-web.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{etkind2025navigating, author = {Etkind, Roger and Mncube, Zimbale}, title = {{Navigating the Taxation of Wealth: Insights from theory to international experience}}, institution = {Institute for Economic Justice}, year = {2025}, month = dec, url = {https://iej.org.za/wp-content/uploads/2026/03/IEJ-PB-WealthTaxes2025-web.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }