South African Consumers on Edge as Tax Talk Intensifies

South Africa is increasingly exposed to the risk of a major tax shock, as an already narrow tax base becomes ever more concentrated among older citizens and a very small cohort of high-income earners.

Key Takeaways

• Older high earners shoulder most taxes: A small, ageing group of taxpayers pays the bulk of personal income tax, making revenues increasingly fragile.
• Youth joblessness limits tax growth: High unemployment and low wages among younger South Africans are preventing meaningful expansion of the tax base.
• Spending pressures outpace revenues: Rising grants and debt costs are stretching public finances as the pool of taxpayers narrows.

Ageing Taxpayers Carry A Disproportionate Burden

In the 2024/25 financial year, approximately 1.7 million taxpayers assessed by SARS were over the age of 55.

Although this age group represented only about 22% of all assessed personal income tax filers, they were responsible for contributing roughly 27% of the total assessed personal income tax.

Collectively, these older taxpayers earned an estimated taxable income of around R690 billion and were assessed for approximately R149.5 billion in tax.

This contribution represents a significant portion of the R563.3 billion in personal income tax collected during the financial year.

Younger Workers Falling Behind In Tax Contributions

By contrast, younger South Africans are contributing far less to the tax system, largely due to structural barriers rather than voluntary non-compliance.

Taxpayers between the ages of 18 and 34 numbered around 2.3 million in SARS assessment data. Together, they generated taxable income of approximately R493 billion and contributed just R76 billion in personal income tax.

This limited contribution is particularly concerning when viewed against the broader demographic picture. People aged 15 to 34 account for more than half of South Africa’s working-age population, estimated at about 20.9 million individuals, according to Statistics South Africa.

Tax System Increasingly Concentrated At The Top

The imbalance between contributors and non-contributors underscores just how concentrated South Africa’s tax system has become.

SARS’s 2025 tax statistics reveal that only 2.4% of South Africans are responsible for paying 77% of all personal income tax.

In absolute terms, just over 1.5 million individuals contribute approximately R562 billion in personal income tax, effectively carrying the bulk of the country’s revenue burden.

Snapshot Of Personal Income Tax Concentration

Category	Estimated Number Of People	Share Of Personal Income Tax
Top contributors	~1.5 million	77%
Remaining taxpayers	~61 million	23%

Strong Revenue Collection, But Limited Room To Expand

SARS has consistently been one of the most effective institutions within the state, regularly meeting or exceeding revenue targets.

Over the past three decades, total tax collections have increased dramatically, rising from R113.8 billion in the 1994/95 financial year to R1.9 trillion in 2024/25. This reflects a compound annual growth rate of approximately 9.8%.

Importantly, much of this growth has been achieved through improved tax compliance and sustained efforts to narrow the tax gap, rather than through aggressive increases in tax rates.

Economic Growth And Emigration Add Further Pressure

According to Professor Daniel Meyer, an economic development specialist and policy analyst at the University of Johannesburg, the current situation is becoming increasingly untenable.

Weak economic growth over more than a decade has severely constrained job creation, with gross domestic product expected to grow by just 1.1% in 2024.

At the same time, ongoing emigration is steadily reducing the pool of high-income earners. Between 2017 and 2021, more than 32,000 individuals ceased their South African tax residency, including thousands earning more than R500 000 per year.

In 2024 alone, an estimated 38,000 taxpayers left the country, resulting in an approximate R3 billion loss in tax revenue.

Data from the BRICS Wealth Report further indicates that South Africa has lost around 20% of its millionaires over the past decade.

Rising Expenditure Compounds Fiscal Risks

On the expenditure side, fiscal pressures are intensifying rapidly.

Social grant spending continues to rise, increasing from R250.97 billion in 2023/24 to R266.21 billion in 2024/25, reflecting both demographic trends and persistent social needs.

At the same time, debt-service costs have climbed sharply to R382 billion, consuming an ever-larger share of government revenue and limiting spending flexibility.

With South Africa’s tax-to-GDP ratio already significantly higher than the African average, the country’s growing dependence on a shrinking and ageing taxpayer base represents an increasingly risky foundation for long-term fiscal sustainability.

Conclusion

South Africa’s tax system is becoming increasingly vulnerable as it relies on a shrinking and ageing group of high-income earners to fund a growing range of public obligations. Weak economic growth, persistently high youth unemployment and the steady emigration of skilled taxpayers are undermining efforts to broaden the tax base, while rising social spending and escalating debt-service costs continue to place pressure on the fiscus. Without sustained job creation, stronger economic expansion and measures to retain and attract skilled workers, the risk of a future revenue shock is likely to intensify, limiting the state’s ability to maintain fiscal stability and deliver essential services.