Abstract
The death tax debate has been going on for a long time, with opponents and proponents of death taxes citing various reasons for retaining, amending or abolishing the taxes and no obvious answer coming to the fore. This study conducted a search for alternative taxes that could replace death taxes. The search transcended national borders in order to identify possible solutions to this age-old problem. The suitability of the alternatives (in the eyes of both the opponents and proponents of death taxes) was measured by comparing the advantages and disadvantages associated with each alternative identified to the advantages and disadvantages associated with death taxes. This study further evaluated whether any of the identified alternatives would be suitable for South Africa. It summarises the available alternatives, their advantages and disadvantages. It also concludes that extensive further research is required to arrive at an optimal solution for South Africa.
Highlights
The opponents of death taxes stand in the left corner of the ring and the proponents in the right corner
The only way in which this debate will end is if an alternative to death taxes is found – an alternative that is suitable in the eyes of both the opponents and proponents of death taxes
As transfer tax and capital gains tax already exist within the South African fiscal system and since they have been implemented in a manner that is comparable to other countries, suggestions for South Africa to facilitate alternatives to death taxes could include amendments to the respective rates at which these taxes are levied
Summary
The opponents of death taxes stand in the left corner of the ring and the proponents in the right corner. The Obama administration did not continue with the reforms, resulting in the reintroduction of estate tax for all deaths occurring on or after 1 January 2011 (Donmoyer, 2010) This raised a furore in the USA, reigniting contentious debates as to whether estate tax (and more broadly – death taxes) should even form part of the fiscal system of the USA. In its third interim report the Katz Commission of Inquiry into Taxation recommended further investigation into the capital transfer tax arising from deceased estates (taking into account international comparisons) in an attempt to achieve vertical equity in South Africa (Department of the National Treasury, not dated). It is evident that the debate around death taxes is still on-going and relevant and that a country’s revenue authorities should consider the advantages and disadvantages of this type of tax as well as the possible alternatives available to them in achieving their goals and commitments
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