Why is National Treasury so scared to tax wealth in South Africa, the most unequal country in the world?

This concept note from the Institute for Economic Justice (IEJ) critiques the South African National Treasury's reliance on austerity and its resistance to implementing wealth taxes. The document argues that the government's claims regarding high statutory tax rates are misleading due to extensive tax breaks and corporate tax avoidance, and suggests that expanding the fiscal envelope through wealth taxation and the strategic use of the Government Employees Pension Fund (GEPF) is necessary to address extreme poverty and fund a green industrial transition.

• The South African National Treasury has adopted an austerity-driven approach to public finances, characterized by limiting expenditure growth and cutting frontline service delivery, while promoting the narrative that personal and corporate income tax avenues are exhausted.
• Statutory tax rates do not accurately reflect the actual tax burden because of significant tax expenditures. For corporations, tax expenditures were R23.1 billion in 2021/22 and R9.4 billion in 2022/23, leading to an effective tax rate for medium and large companies of 18.2% in 2017, which is well below the statutory rate of 27% or 28%.
• High-net-worth individuals and corporations engage in significant tax avoidance and evasion. UNCTAD estimates that illicit financial outflows from South Africa due to corporate trade misinvoicing reached US$40.4 billion in 2017. Additionally, the fiscus loses R135 billion through personal income tax breaks, including those for medical aid and pension contributions.
• The document proposes several revenue-raising alternatives to austerity, including a tax on wealth and speculative financial instruments, recouping illicit financial flows, and removing tax breaks for high-income individuals (those earning over R750,000 per year). It also suggests using the Government Employees Pension Fund (GEPF), which held R2.3 trillion in assets as of 2024, to lower borrowing costs via concessional rates on government bonds.
• Economic stagnation between 2015 and 2024, with average annual growth below 2%, has contributed to a decline in government revenue and high unemployment, which peaked at over 43% in the second quarter of 2025.

APA

Institute for Economic Justice (2025). Why is National Treasury so scared to tax wealth in South Africa, the most unequal country in the world? https://iej.org.za/wp-content/uploads/2026/02/Concept-note-for-MTBPS-SMWX-episode-Wealth-Tax.pdf

Chicago

Institute for Economic Justice. Why is National Treasury so scared to tax wealth in South Africa, the most unequal country in the world? 2025. https://iej.org.za/wp-content/uploads/2026/02/Concept-note-for-MTBPS-SMWX-episode-Wealth-Tax.pdf.

Wikipedia

{{cite report |author=Institute for Economic Justice |title=Why is National Treasury so scared to tax wealth in South Africa, the most unequal country in the world? |date=17 October 2025 |url=https://iej.org.za/wp-content/uploads/2026/02/Concept-note-for-MTBPS-SMWX-episode-Wealth-Tax.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{instituteforeconomicjustice2025why, author = {{Institute for Economic Justice}}, title = {{Why is National Treasury so scared to tax wealth in South Africa, the most unequal country in the world?}}, institution = {Institute for Economic Justice}, year = {2025}, month = oct, url = {https://iej.org.za/wp-content/uploads/2026/02/Concept-note-for-MTBPS-SMWX-episode-Wealth-Tax.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }