A critical analysis of the capital gains tax system for South Africa

[摘要] ENGLISH ABSTRACT:Capital gains tax has been introduced into the South African tax system forthe first time, on all capital gains arising on or after 1 October 2001. The issueof whether a capital gains tax will be a suitable tax for South Africa hasalready been addressed in the form of Commission Reports. In these reports,the idea of adopting this tax system was not recommended for the SouthAfrican tax system or only a limited capital gains tax was recommended. Thisstudy, however, investigates whether the legislation passed by government isin line with the basic principles of an efficient and effective tax system.Firstly, the principles of an efficient and effective tax system are set out asthose originally proposed by Adam Smith as well as those that have beenadapted to modern tax theory. The factors that impact on capital gains tax areidentified and specific criteria are formulated against which the legislatedcapital gains tax is evaluated.The mechanics of the capital gains tax is discussed, classified into the factorsthat impact a capital gains tax and evaluated against the abovementionedcriteria.lt has been held that the introduction of this new form of tax to the SouthAfrican tax system addresses many inefficiencies and deficiencies in thecurrent tax system. lt is the writer's opinion that an investigation as to thedegree to which this tax system adheres to the principles of an effective andefficient tax system, was thus necessary.For the purposes of this investigation, the legislated capital gains tax wasevaluated against the principles of neutrality, certainty and simplicity,administrative efficiency, flexibility, invisibility and equity (fairness, horizontaland vertical equity). lt was found that the principles of flexibility, fairness andhorizontal equity are achieved. To a lesser extent, the principles of neutrality,certainty and simplicity, and administrative efficiency are achieved, and theprinciples of invisibility and vertical equity have not been achieved.

[发布机构] Stellenbosch University