Africa-Press – South-Africa. Businesses and citizens resisting payment for services like water, where the supply of those services is unreliable or of poor quality, is a predictable response to South Africa’s broken service delivery system.
In addition, expecting continued payment for dysfunctional services undermines trust and weakens the government’s revenue base, which is needed to upgrade and maintain service delivery systems.
This is according to Investec Corporate and Investment Banking’s head of infrastructure, Bukiwe Pantshi, who explained that South Africa’s water crisis is no longer a distant policy concern.
Instead, she said the crisis has become an “intensely personal and economic issue, shaping how households live and how companies operate”.
Pantshi pointed out that, in Gauteng alone, Rand Water revealed that 2.5 billion litres of the 5.2 billion it provides to municipalities in the province every day is lost through leaks, ageing infrastructure and theft.
“This structural collapse impacts every sector of society and the broader economy,” she said. “It undermines productivity, increases compliance challenges and drives up costs.”
Pantshi attributed this, in part, to a lack of accountability for municipalities that are failing in their constitutional duty to provide basic services.
The solution to this, she said, is collaboration between the government, businesses, and South African citizens.
However, this collaboration cannot happen until the right accountability measures are put in place. Without accountability, she said, South Africa risks perpetuating failure rather than resolving it.
“Water service delivery is fundamentally a value exchange – the government provides a service, and citizens and businesses pay for it,” she explained.
“When supply is unreliable or poor in quality, resistance to payment is not a moral failing but a predictable response to a broken system.”
“Expecting continued payment for dysfunctional services undermines trust and weakens the revenue base needed to finance maintenance and upgrades.”
Shrinking tax base
President Cyril Ramaphosa and SARS Commissioner Edward Kieswetter
While South Africa has yet to see a full-scale, widespread tax revolt linked to the ongoing water crisis, experts have warned that this situation is untenable.
This comes as the government is already facing a shrinking and very narrow tax base, where the top 13% of individual taxpayers pay over 60% of personal income tax.
In addition, nearly half of personal income tax is paid by the 7.7% of taxpayers with taxable income above R1 million per year.
Tax Consulting South Africa warned earlier this year that South Africa’s shrinking taxpayer base could force the South African Revenue Service (SARS) and the National Treasury to take drastic measures.
This could include increased enforcement, raising taxes, or new measures like a wealth tax, placing greater pressure on remaining taxpayers and businesses.
SARS has already been clamping down on South African taxpayers as pressure to increase revenue from a shrinking tax base has intensified.
SARS Commissioner Edward Kieswetter recently announced that the taxman collected a record R2.01 trillion in tax revenue in the last financial year, the most in South Africa’s history.
The largest source of this revenue was Pay As You Earn (PAYE), with collections totalling R767 billion in 2025/26.
SARS explained that PAYE collections benefited from modest nominal wage growth combined with fiscal drag, despite low employment growth.
In the 2026 Budget, the National Treasury acknowledged the serious burden placed on a small number of taxpayers in South Africa.
“Both personal and corporate income tax contributions to total tax revenue are higher in South Africa than the average across Organisation for Economic Co-operation and Development (OECD) countries,” it said.
“South Africa has become heavily reliant on these two direct taxes, which accounted for approximately 55% of total tax revenue in 2023.”
Notably, this burden is not limited to personal and corporate income tax, with the Treasury also estimating that individuals in the top four income deciles account for over 75% of value-added tax revenue, even though this is a broad-based tax.
“These factors illustrate the importance of managing the tax burden to ensure it remains sustainable and efficient,” the Treasury said.
“High direct taxes erode disposable income and consumption expenditure and may incentivise stronger avoidance measures.”
“Beyond a certain point, increases in tax rates may not generate additional revenue and are detrimental to economic growth.”
The Treasury said that, ultimately, the best solution is to increase revenue by broadening the tax base and growing the economy.
South Africa’s tax burden compared to other OECD countries and the OECD average is shown in the graph below.
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