January 20, 2021
Written by WID.world

A Wealth Tax for South Africa

A Wealth Tax for South Africa


This paper, by Aroop Chatterjee, Léo Czajka and Amory Gethin considers the feasibility of implementing a progressive wealth tax to collect additional government revenue and reduce inequality in South Africa in the wake of the COVID-19 crisis. Drawing on their companion paper on wealth inequality in South Africa (here), the authors estimate that under conservative assumptions, a progressive wealth tax on the richest 1% could raise between 1.5% and 3.5% of GDP. They discuss how sensitive their estimates are to assumptions on mismeasurement of wealth and tax evasion, and they examine technical issues related to the enforcement of the tax. They also explain how this new tax could interact with other capital related taxes already in place in South Africa, and discuss the potential impact on growth.


Key results


  • South Africa is the most unequal country in the world. The top 1% richest South Africans own more than 55% of wealth. The poorest 90% only own 14%.
  • A wealth tax is one policy tool, among others, that could usefully be implemented to collect additional government revenue and reduce these extreme inequalities.
  • The authors estimate that a progressive wealth tax on the top 1% could collect between 70 and 160 billion Rand, corresponding to between 1.5% and 3.5% of the South African GDP.
  • This is assuming that taxpayers would be able to avoid between 10% and 50% of the tax through evasion, offshoring, and other tax avoidance strategies.
  • By means of comparison, the revenue collected would be sufficient to cover about two-thirds of all government health expenditures. It would correspond to over 40% of yearly receipts from the Value Added Tax.


Wealth Tax Simulator

This simulator allows you to estimate how much tax revenue could be collected from a progressive wealth tax on the richest 1% in South Africa. Check it out: //wid.world/south-africa-wealth-tax-simulator 



Wealth Tax Revenue, South Africa


The figures compares the expected revenue from a low, moderate or high progressive wealth tax with government expenditures in proportion of GDP in 2017. A moderate wealth tax with a 30% evasion rate could raise 3% of GDP.





Media inquiries

  • Arabo Ewinyu (Southern Centre for Inequality Studies): arabo.ewinyu@wits.ac.za
  • Olivia Ronsain (World Inequality Lab): olivia.ronsain@wid.world; +33 7 63 91 81 68