Mbeki Rejects One-Off Wealth Tax On Business

by Robert Lee, Tax-News.com, London

17 April 2003

The South African government will not be levying a one off wealth tax on business as compensation to victims of apartheid President Thabo Mbeki announced recently.

The decision has allayed the growing fears within the corporate world of South Africa that the tax would hurt business and deter investors. As an alternative to the measure the government is urging business and individuals to donate voluntarily to a reparations fund set up to help those who suffered under the old regime.

The President was speaking at a joint sitting of houses of parliament where the final report of the Truth and Reconciliation Committee is being discussed. Mbeki announced the payment of R30,000 ($3,900) grants to some 22,000 people as a matter of urgency.

According to reports, Trade and Industry minister Alec Irwin voiced support for Mbeki's announcement, saying the decision was taken with the country's longer term economic interest in mind.

A South African Chamber of Commerce spokesman welcomed the government's decision not to follow the TRC recommendation regarding the one-off tax and praised the government's "pragmatic approach".

Mr Mbeki used the platform to condemn moves by foreign lawyers to sue corporations that are reckoned to have gained from apartheid.

"We consider it completely unacceptable that matters that are central to the future of our country should be adjudicated in foreign courts which bear no responsibility for the well-being of our country," said the President.

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