South Africa’s tax base has stagnated – the government continues to ramp up social spending and the number of people receiving welfare grants.
South Africa’s finance minister announced increases for several grants and the extension of the R350 social relief grant until 2027, benefiting 28.3 million people, while the tax base remains stagnant at 7.1 million on the back of a decline from the previous year.
In addition, Finance Minister Enoch Godongwana announced during his 2024 National Budget Speech on Wednesday that permanent social grants were increased to keep up with inflation and improve access. There will also be a R50 increase to the foster care grant and a R20 increase to the child support grant.
Compared to a year ago, the budget deficit for 2023/24 is estimated to worsen from 4% to 4.9% of GDP.“To put this into perspective, spending on debt-service costs is greater than the respective budgets for social protection, health, or peace and security,” he said.National Treasury’s estimates of individuals and taxable income for 2023/24 clearly illustrate a problem.So, while social grant recipients are rapidly increasing, South Africa’s registered taxpayers are declining.
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