SCRAP CAPITAL GAINS TAX PLEA TO MBOWENI

THE STALLING property market was in dire need of economic relief and called for Finance Minister Tito Mboweni to halt the Capital Gains Tax (CGT), Samuel Seeff, the chairperson of the Seeff Property Group, said yesterday. The 2016-2018 transfer duty and CGT hikes were never going to result in higher government revenue, but achieved the opposite as was now evident from the sales data, he said. The hikes started in 2015 when a new transfer duty category of 11 percent above R2.25 million was introduced. In 2017 a further new category of 13 percent above R10m was added. At the same time, CGT increased in 2017 to 16.4 percent (from 13.65 percent) and again in 2018 to 18 percent (from 16.4 percent). These hikes coincided with the rise of expropriation without compensation, further compounding the pressure on the R3m-plus price categories. Rather than contribute more in tax revenue, Seeff said that it has had the complete opposite effect to the extent that sales volumes at the higher price bands are just about back to the 2008 Global Financial Crisis levels. Additionally, the current interest rate was too high, Seef said. To reignite the market and economy, South Africa needed at least two interest rate cuts from the Reserve Bank during the first half of the year. More importantly, there was a strong case for the Finance Minister to re-evaluate and reverse the disastrous tax hikes, said Seeff. It said pre-2016/17 property was one of the best performing economic sectors. As the market ticked up there was significant growth and an influx of new developments and upgrades. Aside from the construction and real estate industry benefits and laying the foundation for further growth, the market generated significant taxes for the fiscus.

I Staff Reporter