South Africa’s latest Tax Statistics report has highlighted the severe concentration of the tax burden on a small fraction of the country’s population and corporations, Cape {town} Etc reports.
In the 2023/24 fiscal year, South Africa’s gross tax revenue totalled R2.2 trillion.
During this time, personal income tax (PIT) remained crucial to this revenue, kept afloat by modest recoveries in employment and earnings.
However, 1 660 182 individuals, which makes up 2.6% of South Africa’s population of 64 million people, contributed 76.2% of all personal income tax.
An aggregate taxable income of R2.3 trillion was reported by these individuals, which resulted in a tax liability of R499.9 billion.
The figures highlighted the extent to which South Africa’s tax base depends on a small minority, as reported by BusinessTech.
The situation has been deemed concerning in the corporate sector, as only 1 051 companies, which represents 0.1% of the total, pay 72.3% of all company income tax.
Corporations with taxable incomes that exceed R100 million dominate this group, which shoulders an ‘overwhelming majority’ of the corporate tax burden.
Additionally, company income tax revenues have declined in key sectors, such as mining, and Value-Added Tax (VAT) growth stagnated as consumer spending faltered under financial strain.
South Africa’s socio-economic challenges further compounded the pressure on its limited taxpayer base.
Over 30% of the population, approximately 19.2 million people, currently rely on social grants, a figure which has been predicted to grow to 19.7 million by 2026/27.
This would mean that roughly 12% of South Africans, who pay income tax, are ‘supporting a social safety net’ for nearly half the population of the country.
Economist Dawie Roodt warned that the situation could be a looming financial crisis while highlighting the government’s increasing debt burden and unregulated spending as critical threats to economic stability.
‘The state owes too much money. We cannot afford to spend like we do,’ said Roodt warns.
Experts have agreed that if the already burdened minority of taxpayers are taxed further, it could backfire catastrophically.
‘If this increases, the tax base will collapse as many of the 2.6%, as well as businesses, will simply leave the country—which they are already doing,’ said Roodt.
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