A senior Treasury official has told MPs that instead of raising taxes on the wealthy, South Africa should focus on closing loopholes that high-net-worth individuals use to avoid paying tax.
Business Day reports thatTreasury deputy director-general for tax and financial sector policy Chris Axelson said the country should be cautious about the calls for higher taxes on the wealthy.
Axelson was responding to presentations made during the public hearings on the latest medium-term budget to Parliament’s two finance committees.
He is quoted as saying: “We don’t think it is the best course of action to continue increasing these rates as we did in previous years. We would much rather get additional revenue from improvements at the SA Revenue Service (Sars) and closing down mechanisms that high net worth individuals could potentially use to not pay the taxes that are due.”.
Axelson referred to tax estimates for the 2025/26 fiscal year to demonstrate how progressive South Africa’s tax regime was.
Of the 7.9-million individual taxpayers who were estimated to pay R793bn in taxes this year, 13% of the total tax take, or R104bn, would be paid by 5.6% (444,339) of taxpayers earning R750,000-R1m a year; R121bn (15.2%) would be paid by the 318,582 (4%) taxpayers earning R1m-R1.5m; and R256bn (32.3%) would be paid by those earning R1.5m and over (2.7%).