Wealth tax: a systematic literature review
The aim of this study was to gain an understanding behind the reasons for the implementation and subsequent abolishment of net wealth tax among various countries; and to compare these reasons with the possible implementation reasons of net wealth tax in South Africa (SA). The Davis Tax Commission (DTC) is currently investigating the feasibility of implementing annual net wealth tax in SA. The research question for this study−to obtain the reasoning behind the implementation and subsequent abolishment of net wealth tax−is based upon the notion that with 25 countries that have implemented the net wealth tax up to date, only 11 still impose it. The possible association behind the implementation reasons and the subsequent abolishment reasons for net wealth tax had to be established in order to provide guidance to the SA government with regard to the possible implementation of net wealth tax in the future. This study made use of a qualitative research method: a systematic literature review (SLR). An SLR was conducted to select the most relevant literature from the most prominent experts in the field of net wealth tax for this study. SLR is a proven and reliable method, which requires a strict systematic process. This study revealed that the annual net wealth tax is not as popular as it was in the past. Of the 25 countries that had previously implemented net wealth tax, 14 have abolished it. Horizontal equity, reduction of inequality, efficiency, and administration control were the most popular reasons as to why the net wealth tax was implemented. While, practical difficulties, adverse economic consequences, and double taxation were the reasons behind the subsequent abolishment of the net wealth tax. It can, therefore, be concluded that there is a strong association between the possible implementation of net wealth tax in SA with net wealth tax implementation reasons among the countries that have implemented net wealth tax in the past. However, the problems associated with net wealth tax as identified by the Katz Commission in 1994 also correlate with the reasons behind why many countries subsequently abolished net wealth tax. There was, however, a slight correlation between the countries that have implemented net wealth tax for the same reason and the reason behind their subsequent abolishment.