How many individual tax payers prop up South Africa’s tax base?

How many individual tax payers prop up South Africa’s tax base?


Source: Payroll Authors Group

Editor’s Note: while the stats below make for interesting reading the bigger concern is how fragile the South Africa tax base really is and how little room the Minister of Finance has to manoeuvre.

For the 2017 tax year, Personal Income Tax (PIT) is forecast to contribute 37,5% to the total tax revenue that runs our country, with VAT next in line at 25,6% followed by corporate income tax at 16,9%.

The grouping of PIT taxpayers always makes for interesting reading. Consolidation of the budget’s estimates for 2016/17 of the number of individual taxpayers and their income tax paid shows that:

  1. 6% of taxpayers pay 47% of the total R441 billion PIT revenue; or
  2. 429 173 individual taxpayers pay R207 billion of the total R441 billion PIT revenue

The 47% contribution by the 6% high income taxpayers means that their PIT is about 18% of the total tax revenue of R1 175 billion that runs South Africa. There are only just over 400 000 of them.

While we can breathe a collective sigh of relief that employees escaped an increase in the top marginal PIT tax rate of 41% for 2016/17, bear in mind that the Minister of Finance made it clear that under current financial circumstances taxes will have to be raised to increase tax revenue by about R15bn per year for the next two years.

If the situation doesn’t improve before then, individual taxpayers will probably need to contribute through increased marginal tax rates.