Tag: wealth

Source: EWN

Elon Musk, the charismatic chief of electric automaker Tesla, has overtaken Bill Gates to become the world’s second richest person, according to the Bloomberg list of billionaires.

The South African-born Musk, 49, added $7.2-billion in wealth on Monday alone following Tesla’s latest surge. He now has an estimated $128-billion.

The outspoken Musk, who is also cofounder of SpaceX, had already overtaken numerous luminaries in recent weeks, including Facebook Chief Executive Mark Zuckerberg and Bernard Arnault, the head of French luxury giant LVMH.

Now the only person he stands behind is Amazon founder and CEO Jeff Bezos, whose wealth is estimated at $182 billion.

The upheaval of the coronavirus pandemic has allowed the ultra-rich to amass even more wealth as technology companies have gobbled up more market share of the economy.

In 2020, Tesla shares have surged more than 500% and the company is now valued at more than $500-billion.

Musk, who owns about 18% of the shares, has made some $100-billion during this stretch.

Tesla shares have gained further since the presidential election of Joe Biden, who favours more aggressive policies to address climate change. Tesla was also boosted by an announcement that it is being added to the prestigious S&P 500 index.

 

Tech billionaires are just getting richer

By Yusuf Khan for Business Insider US

Tech billionaires are leading the ultra-wealthy in growing their fortunes, according to a UBS report titled “The Billionaire Effect” released on Friday.

The Swiss bank found tech tycoons’ wealth grew 3.4% or $1.3 trillion (roughly R19.1 trillion) in 2018, and the number of tech billionaires nearly doubled from 76 to 148 in five years.

Billionaires have become a key policy issue in the US as Sen. Elizabeth Warren and other Democratic presidential candidates have proposed wealth taxes.

Tech billionaires are leading the ultra-wealthy in growing their fortunes, according to a UBS report titled “The Billionaire Effect” released on Friday.

UBS, one of the world’s largest wealth managers with roughly 1 000 billionaire clients, found tech tycoons’ wealth grew 3.4% or $1.3 trillion (roughly R19.1 trillion) in 2018, and the number of tech billionaires nearly doubled from 76 to 148 in five years.

The Swiss bank estimated the wealth of tech entrepreneurs like Amazon CEO Jeff Bezos and Facebook CEO Mark Zuckerberg almost doubled in the last five years – growing 91%.

“If tech billionaires’ wealth were a country, it would rank second only to the US,” the report said. “Looking back over five years, tech billionaires have driven almost a third of the growth in billionaire wealth. US tech billionaires accounted for more than half of that growth.”

Billionaires have become a key policy issue in the 2020 US presidential election with Sen. Elizabeth Warren and other democratic presidential candidates saying they would implement a tax on the ultra wealthy.

Warren has been criticised by billionaires such as Leon Cooperman for her proposed wealth tax of roughly 3% to 6%. Cooperman said she was “s——- on the American dream”.

Meanwhile, tech billionaires have come under fire for issues such as data protection and political advertising on their platforms. Zuckerberg – who’s worth $72.9-billion (roughly R1-trillion), according to Bloomberg – was recently grilled by Rep. Alexandria Ocasio-Cortez over Facebook’s sale of personal user data to third parties and policy of allowing false political adverts.

“I think there will be a change in behaviour [of billionaires] driven by the mainstream, with a reduction in risk appetite and I think there will be a reduction of output,” said Josef Stadler, head of UBS’ global ultra-high net worth department. “Whether that’s a good or bad thing I don’t know,”

Stadler made the comments at the report’s launch event in London, in response to a question about whether billionaires will be forced to clean up their acts.

The report highlighted that entrepreneurs who built software, the internet, and equipment are the wealthiest in the tech industry. However, fintech and multimedia have grown rapidly – 419% and 504% respectively in the past five years.

“Even so, pioneers of the future such as e-commerce, fintech, ride hailing, and data systems are making headway, as they stand to disrupt swathes of the global economy,” the report said.

“Banking today is already different today than it was five years go. You look at Revolut and Monzo and the newly developed systems and this will fuel new billionaires or at least millionaires,” said Marcel Tschanz, Swiss head of wealth management at PWC, at the event.

$17.4bn wiped off Zuckerberg’s fortune

By Melanie Kramer for Money Makers

Facebook founder and CEO Mark Zuckerberg has lost $17.4 billion, suffering from Facebook’s reputation and share price this year. He’s not the only billionaire to lose out in 2018, but he’s currently the most famous and has certainly lost more than any other.

Zuckerberg has dropped from being the third-richest person in the world to becoming the sixth richest, according to Bloomberg’s Billionaires Index. Zuckerberg now has a net worth of $55.3 billion.

The Facebook founder has faced increasing criticism over the ongoing Cambridge Analytica data scandal and Facebook’s response to the apparent social media influence exerted by Russia in US elections.

Data privacy is still an unresolved issue in the eyes of many global governments. Some seek answers over how their citizen’s personal information is handled and how Facebook will prevent illicit behavior in the future.

Just two weeks ago the UK and Canadian Parliaments summoned Zuckerberg to personally answer their questions, in an unprecedented joint move.

Facebook shares fell 3% on Friday to their lowest point since April 2017, and to a value of $139.53.

The latest fall in Facebook’s share price followed a call last week by four US Democratic senators to answer questions about Facebook’s use of contractors to spread “intentionally inflammatory information.”

According to reports, Facebook had hired a consulting firm founded by Republican strategists as part of its response to the concerns over Russian meddling. The firm’s subsequent actions are under scrutiny.

Zuckerberg’s Chan Zuckerberg Initiative is a major US political donor and Facebook co-founder Dustin Moskovitz has also donated over $35 million to Democratic and Liberal candidates and groups.

Source: Fin24

The purchasing power of South African households’ net wealth increased by R60.2bn over the period from the end of the first quarter of 2018 to the end of the second quarter despite the economy slumping into recession.

This is one of the findings of the Momentum-Unisa Household New Wealth Index.

The main reason for this improvement is given as an increase of R46.5bn in the real value of households’ assets. At the same time, the real value of households’ liabilities – mostly outstanding debt – decreased by R13.7bn.

The real value of household net wealth is obtained by subtracting the real value of their liabilities – mostly their outstanding credit and other debts – from the real value of their assets – mostly of the real values of their retirement funds, financial investments and residential properties.

The real value of household assets was boosted by an increase in the real value of households’ investments – specifically in retirement funds – which benefitted from an increase in share prices of the resources sector in particular.

These share prices received support from the rand exchange rate, which depreciated by almost 14% against the dollar over the period, offsetting declining commodity prices.

The real value of households’ residential assets did not receive much support over the quarter. House prices contracted in real terms, while real investments in the residential sector also declined.

According to FNB’s House Price Index, real house prices was 0.5% lower compared to a year ago, and virtually unchanged compared to the first quarter of 2018.

Furthermore, real fixed capital formation in the residential sector contracted by 6.5% in the second quarter of 2018 compared to the first quarter.

“The weak state of the economy and in consumer finances, as well as uncertainty about land reform, are factors that combined to the weak performance of real household residential assets,” says the report.

Households’ outstanding liabilities continued to increase at a slower pace than household consumption expenditure inflation.

This situation – whereby outstanding household debt increases at a slower pace than inflation – is indicative of consumer finances being under pressure, according to the report.

The report predicts that preliminary estimates point to a decline in the real value of household assets during the third quarter of 2018 as share prices tumbled over this quarter, while real house price growth remained negative.

If South Africa’s richest man, Johann Rupert, had to run South Africa with his personal wealth, he wouldn’t even be able to keep the government going for a full month.

This is one of the findings of Bloomberg’s latest Robin Hood Index for 2018, which measures how global billionaires could improve the lives of the poor if they gave all their money away.

In the 2018 iteration of the index, the data and media firm questioned how far billionaire wealth could stretch if the world’s richest had to cover the costs of running their home-country government daily.

According to the index, the typical running cost, per day, for South Africa is $333.5 million (approximately R3.98 billion). With an estimated net worth of $8.1 billion (Bloomberg data), Rupert’s wealth would only keep South Africa going for 24 days – hitting around the middle mark of the 49 countries assessed.

Cyprus’ richest man, John Fredriksen ($10.4 billion) could keep his home country running for well over a year (441 days), while China’s top billionaire, Jack Ma ($45.5 billion) could only keep his government running for four days, Bloomberg said.

To calculate government running costs, Bloomberg took total government spending spread over 365 days. It stressed that the index was simply an ‘intellectual exercise’ and not reflective of governments’ priorities or the intricacies of each individual country’s positioning.

South African billionaires

According to Forbes’ real time ranking of billionaires, there are only five dollar-billionaires in South Africa, down from eight billionaires in the official ranking for 2017.

Market movements during 2017 and the start of 2018 – as well at the widely publicised fall of Steinhoff International – saw a three super-rich businessmen lose their billionaire status: retail magnate Christo Wiese, investor Allan Grey, and ‘boere Buffett’ Jannie Mouton have all dropped off the list.

Forbes differs from Bloomberg in that it ranks diamond magnate Nicky Oppenheimer as the richest man in the country, with Johann Rupert ranked second.

Expanding on Bloomberg’s index model, South Africa’s billionaires, combined, could keep the government running for just under 63 days.

This is how long South Africa’s billionaires can keep the government running, individually:

Giving all their money away

If South Africa’s billionaires were to give all their wealth away to the country’s poorest, each person living in poverty would walk away with a once-off payment of about R11,400.

According to Stats SA’s poverty data released in 2017, approximately 40% of the population live below the lower-boundary poverty line – or 21.9 million people.

Using Forbes’ data, total billionaire wealth in South Africa amounts to $20.9 billion – or R249.55 billion . The table below shows how much each billionaire would contribute.

Billionaire wealth data as at 12 February 2018. Currency exchange at 1 USD = 11.94 ZAR

Source: Business Tech

Wealth tax and VAT hike being considered

With a massive tax shortfall in South Africa, new ways of drawing in revenue for the fiscus are being considered, including a wealth tax.

However, experts warn that a wealth tax is unlikely to cover even a quarter of South Africa’s current debt shortfall of R50 billion, meaning that a VAT increase in some form is also likely.

This is according to Judge Dennis Davis, who was speaking to BusinessDay ahead of a new wealth tax report set to be released by the Davis committee at the end of November.

Early signs indicate that a wealth tax could raise as little as R6-billion, meaning that it will have to be used in conjunction with other tax hikes.

“The problem with a wealth tax in SA is that it would be levied on an incredibly narrow base,” said Davis. “A huge amount of wealth in SA is also tied up in retirement funds, and we are busy investigating the implications of that.”

The committee is also concerned that a new wealth tax may penalise middle-class savings, and is aware that the South African Revenue Service (SARS) would need to institute a sophisticated system to administer it.

In comparison, Davis said that just a 1-percentage-point increase in the VAT rate (bringing it to 15%) would raise R20 billion.

Another option being mooted is a multi-tiered VAT system of 0%, 14% and 20%, said Davis.

This would result in a further twenty “necessities” being zero-rated, while luxury items such as smartphones could see a 20% VAT tax.

“It all comes down to the fact that we have to increase VAT,” said Davis. “Raising personal and company income tax isn’t going to get us there.”

Wealth tax

The Davis Tax Committee issued a media statement on 25 April 2017, calling for written submissions on the introduction of a possible wealth tax in South Africa.

This proposal arrived two months after an increase in the top income tax bracket for individuals by 4% to 45%, resulting in an effective capital gains tax (CGT) rate for individuals of 18%. This should be seen on the back of the increase the CGT rate by nearly 5% from 13.32% in 2014 to the current 18% in 2017.

Unlike income tax, where taxes flow from earnings (ie wages, salaries, profits, interest and rents), a wealth tax is generally understood to be a tax on the benefits derived from asset ownership.

The tax is to be paid on the market value of the assets owned year on year, whether or not such assets yield any income or differently put, it is typically a tax on unrealised income.

According to law firm ENSAfrica, while a wealth tax may undoubtedly be beneficial to address the divide between top and bottom level income earners, two main problems have been identified by some of the countries that have abolished this tax, namely the disclosure and valuation of the applicable “wealth”.

“Some of the reasons for its abolition have been cited as the disproportionately high administration and compliance costs associated with this form of tax, as well as capital flight from the country, said ENSAfrica.

“This sentiment is shared by France, where one report, established by the French Parliament, estimated that more than 500 people left the country in 2006 as a result of the impôt de solidarité sur la fortune (or ISF wealth tax). ”

“Looking at the above factors, it is difficult to see how a wealth tax will assist to improve South Africa’s weak economic growth and unemployment, in particular, if it incites a further flight of capital and a resultant decrease in economic activity,” it said.

Source: Supermarket & Retailer 

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My Office News Ⓒ 2017 - Designed by A Collective


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