Mark Shuttleworth

Johannesburg - The exchange control charge imposed on Mark Shuttleworth formed part of a regulatory environment and was not a tax, the Constitutional Court heard on Tuesday.

Jeremy Gauntlett SC, for the SA Reserve Bank (SARB), told the court: “The question is, is it a tax for the purpose of the Constitution or is it a charge that forms part of a regulatory environment?

“Our learned friends (Shuttleworth's counsel) say the former, we say the latter.”

Were it a tax, it would have required an appropriation from Parliament.

Gauntlett said capital outflows were “scary”, as shown for example in 1933 during the Great Depression, where the flight of people and capital posed a serious problem for governments, especially if they happened quickly.

The imposition of the charge served to slow down the movement of capital, not people, Gauntlett said.

Deputy Chief Justice Dikgang Moseneke asked Gauntlett: “On your argument you pay to exit, and you pay only if you choose to exit?

“On your argument it is not a tax... but seeks revenue across the length and breadth of this land?”

Gauntlett replied that the critical thing was that the main purpose of the controls was to discourage the transfer of capital.

“The dominant purpose is to regulatory control conduct,” he said.

Last year, the Supreme Court of Appeal (SCA) ordered that the SARB repay Shuttleworth R250 million plus interest in a case about exchange controls.

The matter dates back to March 5, 2008, when Shuttleworth applied to the SARB to transfer R1.5 billion out of South Africa when he moved to the Isle of Man.

Sapa