Tax

The Institute for Economic Justice (IEJ) identifies four critical failures in South Africa's tax management: significant revenue shortfalls (approximately R50bn in 2018), the undermining of the South African Revenue Service (SARS) by corruption and state capture, a tax mix that under-taxes wealth and corporate income, and high levels of illicit financial flows. The brief proposes increasing Personal Income Tax (PIT) and Corporate Income Tax (CIT) rates, introducing a permanent net wealth tax (0.5%-2.5%), and expanding VAT zero-rating for 23 categories of essential goods to support low-income households. To recover lost revenue, the IEJ recommends revitalizing SARS through a Presidential Commission, reintroducing a special priority crime unit, and increasing transparency of corporate and offshore structures. These measures are intended to fund a fiscal stimulus, public employment guarantees, and social services to enhance job creation.

• South Africa's tax system is characterized by four primary failures: a revenue shortfall of approximately R50bn in the 2018 National Budget, the erosion of SARS's administrative capacity due to corruption and state capture, a tax mix that is not sufficiently progressive regarding wealth and corporate income, and the prevalence of illicit financial flows and tax evasion.
• Increasing Personal Income Tax (PIT) could generate significant additional revenue. Scenario 1, raising rates for those earning over R500,000, could raise R27.2bn (R17.7bn adjusted for elasticity), while Scenario 2, raising the top three rates, could raise R47.4bn (R30.8bn adjusted for elasticity).
• Adjusting Corporate Income Tax (CIT) rates between 30% and 35% could raise between R4.1bn and R43.4bn, even if taxable income falls by 5% due to the rate increase.
• The brief proposes 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%, implementing a land property tax on vacant land, and increasing ad valorem excise duties on luxury goods.
• To support poor households and advance rights to health and education, the IEJ recommends reducing VAT to 14% within three years and zero-rating 23 categories of essential food and non-food items, such as baby food, sanitary towels, and textbooks.
• Administrative reforms to SARS are deemed essential, including the suspension of officials implicated in corruption, the appointment of a Presidential Commission for revitalization, and the reintroduction of a special priority crime unit to fight tax evasion.
• Insufficient tax revenue directly hinders job creation by limiting the state's ability to fund formal state-sector jobs, public works schemes, and private-sector generating infrastructure like hospitals and roads.

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} }