South Africa’s finance minister, Enoch Godongwana, has joined forces with global counterparts in advocating for enhanced international cooperation to ensure the effective taxation of the world’s wealthiest individuals.
Also read: Hill-Lewis calls on minister about devolving policing in WC
According to BusinessTech, Godongwana, along fellow global finance ministers, endorsed the G20 Ministerial Declaration on International Tax Cooperation.
The declaration emphasised that progressive taxation is crucial for addressing inequalities, fostering economic growth, and achieving Sustainable Development Goals.
It added that international tax cooperation is essential for improving domestic tax administration capabilities.
‘Wealth and income inequalities are undermining economic growth and social cohesion and aggravating social vulnerabilities,’ said the declaration.
‘Several countries struggle to implement effective progressive tax policies to address these issues.’
‘Moreover, the international mobility of ultra-high-net-worth individuals creates challenges in ensuring adequate levels of taxation for this specific group, impacting tax progressivity.’
‘Promoting effective, fair, and progressive tax policies remains a significant challenge that international tax cooperation and targeted domestic reforms could help address.’
Thus, G20 countries, including South Africa, the USA, the UK, the EU, China, and Australia, will cooperate to ensure effective taxation of individuals with assets exceeding $30 million (R550 million).
‘Cooperation could involve exchanging best practices, encouraging debates around tax principles, and devising anti-avoidance mechanisms, including addressing potentially harmful tax practices.’
Oxfam South Africa welcomed Godongwana’s support, noting that South Africa has the world’s highest income inequality, with a Gini Coefficient of 0.67.
They highlighted that since 2020, the combined wealth of the country’s billionaires has increased by a third, while the bottom 99% have become poorer.
‘This is serious global progress—for the first time in history, the world’s largest economies have agreed to cooperate to tax the ultra-rich. Finally, the richest people are being told they can’t game the tax system or avoid paying their fair share,’ said Susana Ruiz, Oxfam International’s Tax Policy Lead.
‘Governments have for too long been complicit in helping the ultra-rich pay little or zero tax. Massive fortunes afford the world’s ultra-rich outsized influence and power, which they wield to shield, stash and supersize their wealth, undercutting democracy and widening inequality.’
‘Now to the next step: at the G20 Summit in November this year, leaders need to go further than their finance ministers and back concrete coordination: agreeing on a new global standard that taxes the ultra-rich at a rate high enough to close the gap between them and the rest of us.’
The South African Revenue Service (SARS) has ramped up its efforts to ensure compliance among high-wealth individuals and multinational enterprises, aiming to ‘follow the money.’
Jashwin Baijoo of Tax Consulting SA stated that SARS intends to be the ‘catalyst for a more efficient and effective economy’ by targeting significant taxpayers.
Baijoo emphasised that non-compliance among the wealthy can result in billions of rands in lost revenue.
Also read:
Picture: Fani Mahuntsi/Gallo