Speculation on Wealth Tax Could Contribute to Further Emigration of South Africa’s Wealthy
LONDON, April 28, 2021 /PRNewswire/ — As many countries attempt to recover from the economic fallout of the pandemic, the introduction of a wealth tax has become an increasingly popular solution to tackle this. While some experts have concluded that a wealth tax could be a short-term tool to raise revenue, many others have also highlighted the concerns attached to the taxation. South Africa has become the latest country rumoured to introduce a wealth tax with a recent study by the World Inequality Lab demonstrating that the tax could generate up to 160 billion rand ($10.7 billion dollars). Similarly, experts at the University of the Witwatersrand in Johannesburg have suggested establishing a progressive wealth tax for those earning above 3.6 million rand which accounts for 354,000 high-earners in the country. While there have been no plans as yet to establish the levy, the nation has advanced on its ‘high wealth individual taxpayer’ division.
Announced during February’s Budget Speech, the segment is aimed at cracking down on individuals who have not declared all their income due to ‘complex financial agreements’. The South African Revenue Service (SARS) has already begun identifying wealthy citizens who fall under this bracket, with many expected to receive their first letter this month. Extensive studies have shown that South Africa’s wealthy population continues to decline with roughly 1,900 millionaires leaving since the last figure recorded in 2020. According to New World Wealth’s Africa report, a total of 4,200 high net-worth individuals have left the country over the last decade. With the possibility of higher taxes for the wealthy, this number is likely to grow.
“Applying further draconian tax laws on productive entrepreneurs is counterintuitive to creating a holistic economic development plan. This proposed move of SARS will create further mistrust in the government, driving more skilled professionals to explore other countries that offer an equitable and welcoming environment,” says Micha Emmett, CEO of CS Global Partners and dual-qualified lawyer with decades of experience in investment migration. “Investors are looking at nations with better economic opportunities that allow them to protect their wealth in a politically and economically stable democracy.”
The Caribbean has become an ideal destination for South Africans who want to remain in a similar environment without the disadvantages of their home country. The region is responsible for pioneering the Citizenship by Investment Programme – an initiative that encourages foreign investors to contribute to the economy of a nation in exchange for citizenship and the associated benefits.
Dominica’s Citizenship by Investment Programme is one such option. Established in 1993, the Programme has been ranked the world’s best offering for second citizenship for the last four consecutive years by an independent study. To qualify for citizenship, applicants must either make an investment into a government fund or buy into selected real estate options. Only once passing a multi-tiered vetting process are applicants granted citizenship. Benefits include visa-free or visa-on-arrival travel to over 140 countries and territories, the right to live, work and study in the nation and the ability to pass citizenship down for generations to come.
Not only does the nation boast strong governance that facilitates an environment ripe with economic opportunity, but it is one of the few countries in the world to successfully manage the coronavirus outbreak. Dominica’s vaccination programme is also now fully underway, proving that its government is proactive and committed to the prosperity of its citizens.