Too taxing, too much taxing, or not progressive enough? The introduction of a wealth tax as an equality imperative in South Africa

Abstract

Abstract South Africa’s status as the most unequal country in the world unacceptably mocks the Constitution’s promise to achieve an equal society. Positing the introduction of a progressive, recurring, threshold-tested tax on private net wealth holding as a solution to this inequality, this article asks whether there is a constitutional imperative to introduce a wealth tax in South Africa. Arguing in the affirmative, the article situates the debate in the context of the shift in economic policy-making from a focus on labour income to wealth given global economic, political, and social concerns inherent in extremely wealth-unequal societies. The article shows that South Africa’s Constitution imports a substantive notion of equality that places a positive obligation on the state to remedy inequality through putting in place contextually appropriate measures. Wealth inequality is a disastrous hallmark of our context and racially demarcated wealth inequality has endured owing to wealth’s self-perpetuating value and intergenerational transferability. This deepens social injustices, undermines other redistribution efforts, and has created a poverty trap for Black South Africans hindering their achievement of equality in the substantive sense. A wealth tax that satisfies minimum thresholds of feasibility can be justifiably introduced given the severity of South Africa’s wealth inequality and the need for any available measure to prevent its worsening. Private persons may justifiably be affected by such redistribution policies, which should take the form of a wealth tax for symbolic and practical reasons and despite legitimate worries of corruption. Furthermore, a wealth tax would pass constitutional muster. The article concludes that there is an equality-laden imperative to introduce a wealth tax in South Africa, without which the Constitution’s promise of an equal society becomes increasingly impossible.