Tax

This policy brief by the Institute for Economic Justice (IEJ) outlines systemic failures in South Africa's tax management and proposes a series of progressive tax reforms to generate revenue for job creation and economic transformation.

• South Africa's tax management is hindered by four primary issues: a significant revenue shortfall (approximately R50bn identified in the 2018 National Budget), the erosion of the South African Revenue Service's (SARS) administrative capacity due to corruption and state capture, an insufficiently progressive tax mix where wealth is under-taxed, and high levels of tax evasion, avoidance, and illicit financial flows.
• The IEJ proposes increasing Personal Income Tax (PIT) through two scenarios. Scenario 1 raises rates for those earning between R500,000 and R1mn (from 26% to 28%) and those over R1mn (from 37% to 40%), potentially raising R17.7bn after adjusting for a 35% elasticity of taxable income. Scenario 2 raises the top three rates to 18%, 29%, and 41%, potentially raising R30.8bn after the same adjustment.
• To increase Corporate Income Tax (CIT) revenue, the document suggests effective rates between 30% and 35%. A 2 percentage point increase could raise R16.5bn, and even if taxable income fell by 5% due to the increase, additional revenue between R4.1bn and R43.4bn could be generated.
• The brief recommends several wealth and luxury tax measures, including a permanent net wealth tax of 0.5%-2.5%, raising the Capital Gains Tax (CGT) inclusion rate to 100%, instituting a land property tax on vacant land, and increasing VAT on luxury goods.
• The IEJ suggests reducing VAT back to 14% within three years and zero-rating 23 categories of basic food and non-food items (such as baby food, sanitary towels, and textbooks) to benefit poor households and advance rights to health, education, and dignity.
• To address tax administration and evasion, the brief proposes suspending SARS officials implicated in corruption, appointing a Presidential Commission to revitalise SARS, reintroducing a special priority crime unit, and increasing transparency through a public registry of trusts and companies, including offshore ones.
• The document argues that increasing tax revenue can directly support job creation by funding state employment, public works schemes, and social and economic infrastructure like hospitals and roads, which in turn generates private sector jobs.

APA

Isaacs, G. (2018). Tax. Institute for Economic Justice. https://iej.org.za/wp-content/uploads/2020/07/Stream-2-Policy-Brief-3-Tax-1.pdf

Chicago

Isaacs, Gilad. Tax. Institute for Economic Justice, 2018. https://iej.org.za/wp-content/uploads/2020/07/Stream-2-Policy-Brief-3-Tax-1.pdf.

Wikipedia

{{cite report |last1=Isaacs |first1=Gilad |title=Tax |publisher=Institute for Economic Justice |date=August 2018 |url=https://iej.org.za/wp-content/uploads/2020/07/Stream-2-Policy-Brief-3-Tax-1.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{isaacs2018tax, author = {Isaacs, Gilad}, title = {{Tax}}, institution = {Institute for Economic Justice}, year = {2018}, month = aug, url = {https://iej.org.za/wp-content/uploads/2020/07/Stream-2-Policy-Brief-3-Tax-1.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }