AP Billionaire entrepreneur Mark ShuttleworthCape Town - Billionaire entrepreneur Mark Shuttleworth says exchange controls have the effect of stifling the economy, particularly disadvantaging migrant workers and small businesses seeking to work outside South Africa’s borders.
“Everything you buy is more expensive. South Africans are less globally competitive, and cross-border labourers, already vulnerable, pay the highest price of all – a shame that we should work to address.”
He was speaking after the Supreme Court of Appeal (SCA) set aside a large part of an order by the Gauteng Division of the High Court in Pretoria, saying on Wednesday the levy had been imposed unlawfully by the South African Reserve Bank (SARB).
Shuttleworth emigrated to the Isle of Man in 2001. In 2009, he applied to the Reserve Bank, through Standard Bank, for permission to move his remaining assets in South Africa – worth R2.5 billion.
He ended up paying a 10 percent levy of more than R250m under protest, pending a request to the SARB to reconsider its decision to impose the levy.
The SARB, however, refused to reconsider its decision.
Shuttleworth contended that the exit levy was a revenue-raising mechanism. He took his fight to the high court, mainly against the imposition of the levy, which he argued was unconstitutional.
Although the high court struck down certain legislative provisions in a ruling handed down in July last year, it did not find in Shuttleworth’s favour with regard to the levy.
The matter went to the SCA, which has upheld Shuttleworth’s appeal as well as a cross-appeal by the SARB, the minister of finance and the president over the declarations of invalidity of the provisions.
“We are now considering the continuation of the case in the Constitutional Court, to challenge exchange control on constitutional grounds and ensure that the benefits of today’s ruling accrue to all South Africans,” Shuttleworth said in a statement on Wednesday.
He added he would use the reimbursed levy to start a trust to help people who could not afford to take on the state.
“It is expensive to litigate at the constitutional level, which means that such cases are imbalanced – the state has the resources to make its argument, but the individual often does not.
“For that reason, I will commit the funds returned to me to today by the SCA to a trust… The mandate of this trust will extend beyond South African borders, to address constitutional rights for African citizens at large, on the grounds that our future in South Africa is in every way part of that great continent.”
The SCA found on Wednesday that imposing a 10 percent “exit levy” – abolished in 2010 – was inconsistent with the constitution and invalid.
“The levy raised revenue for the state,” read the judgment, which was penned by judges Mahomed Navsa and Visvanathan Ponnan, with three others agreeing.
“It brought 10 percent of the value of any capital in excess of R750 000 exported out of the country into the National Revenue Fund. While in force, it raised approximately R2.9bn.”
The levy, the court found, fell within the category of “taxes, levies or duties”.
According to the judgment, it was unconstitutional for taxes or levies to be raised by a delegated legislation that was not “specifically authorised in a money bill enacted in accordance with the money bill provisions of the constitution”.
In considering whether Shuttleworth’s levy money should be repaid, the court said that by paying under protest, Shuttleworth had sought to convey that the payment wasn’t a voluntary one and reserved the right to seek to reverse it.
The SARB was ordered to repay Shuttleworth the amount with interest from April 13, 2012.
The court did not believe there was a danger of a “flood of similar claims”.
Cape Times