Africa-Press – South-Africa. Finance Minister Enoch Godongwana says that South Africa’s tax-to-GDP ratio is the highest it has ever been, with taxpayers struggling under the worst tax burden on record.
Godongwana laid out the numbers in the reply to a parliamentary question from African Transformation Movement (ATM) MP, Vuyolwethu Zungula, regarding the country’s tax measures.
Specifically, Zungula questioned South Africa’s tax-to-GDP ratio, whether this was sustainable, and what the National Treasury intended to do to ensure stable tax collection over the next five years.
The finance minister conceded that South Africa’s tax-to-GDP ratio, at 25.1%, was historically high, and high when compared to other global economies, including those similar to South Africa in size.
He said that the best way to secure future tax revenue was to broaden the tax base, which would allow for lower taxes.
However, as it stands, South Africa relies on high taxes on a much smaller base, making policy decisions difficult.
“A broad tax base, combined with relatively low tax rates and improved tax administration, supports sustainable revenue-raising and economic growth over the long term,” Godongwana said.
“In this context, the tax strategy in recent years has been to avoid tax increases as far as possible—especially increases in tax rates.”
However, once spending pressures become binding, tax increases would have to be considered, Godongwana admitted.
This exact situation led to significant budget drama in 2025, where the National Treasury initially attempted to impose a two percentage point VAT hike, which was subsequently rejected.
This was replaced with a 0.5pp hike, which also fell through.
In the end, the National Treasury turned to other tax measures, such as hiking the fuel levy and not adjusting tax brackets for inflation, to get the additional revenue it needed to finance government spending.
South Africa’s tax burden is huge
The tax-to-GDP ratio measures the overall tax burden for a given period.
It reflects the share of a country’s output that is collected by the government through taxes, and is an important indicator to measure the tax effort of the government.
The International Monetary Fund, World Bank, the Organisation for Economic Co-operation and Development, and the African Tax Administration Forum use this ratio to analyse and compare tax systems and economic performance of countries.
South Africa’s tax-to-GDP ratio measured 25.1% in the 2024/25 fiscal year, the latest year for which data is available.
When comparing this to data in the 2024 Tax Statistics, jointly published by the South African Revenue Service (SARS) and the National Treasury, the level of the ratio in 2024/25 is the highest on record since 1994/95.
The tax-to-GDP ratio increased by 1.4 percentage points from 23.7% in 2019/20 to 25.1% in 2024/25.
“There has been a steady increase in the ratio over the period, outside of a sharp decline in 2020/21, reflecting the significant impact of the COVID-19 pandemic on revenue collection and on the broader economy,” Godongwana noted.
“This period also coincided with an improvement in SARS’ performance following the serious governance and integrity failures at the revenue authority in the period before 2019/20.”
More effective tax administration contributed to enhanced levels of tax collection since then.
Godongwana said that the tax-to-GDP ratio in South Africa is not only at a historic high, but the burden imposed by personal and corporate taxes is also high when considered globally.
“South Africa compares to countries such as Denmark, New Zealand and Norway with a major reliance on taxes on income, profits and capital gains of individuals and corporations,” he said.
“It has a high share of personal income tax as a percentage of GDP and a high top tax rate, both of which are much larger than those of other developing economies.”
The corporate tax burden relative to GDP is one of the highest globally.
In contrast, South Africa’s VAT rate is still relatively low compared with peer countries and is an efficient source of public revenue, hence why the government attempted to tap into it in the 2025 budget.
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