How much more tax you pay today than ten years ago 

Deteriorating government finances and an overburdened tax base meant the government turned to “bracket creep” to raise revenue – something that will see South Africans pay up to 21% more in tax than a decade ago.

Government finances continued to deteriorate in the 2023/24 financial year, with tax collections growing by only 2.6% – less than the inflation rate. 

Lower-than-expected tax revenue and government overspending saw the National Treasury report a R347 billion deficit for 2023/24.

As a result, the Treasury aims to raise an additional R15 billion in tax in the 2024/25 tax year.

Coronation’s head of personal investments, Pieter Koekemoer, said this would primarily be done through a phenomenon called ‘bracket creep’.

Bracket creep happens when tax tables and tax deduction limits are not adjusted for inflation, making taxpayers pay more and thus resulting in greater revenue without hiking rates.

Koekemoer explained that, as tax brackets were not adjusted for inflation, effective tax rates have increased across the income spectrum, as seen in the table below.

Koekemoer said that, up until the 2014/15 Budget, relatively healthy economic performance resulted in several budgets that brought real relief for taxpayers. 

“However, the effect of the state capture years and significant underinvestment in our infrastructure over many years resulted in much weaker economic performance since,” he said. 

Material tax hikes were announced in five consecutive budgets to alleviate this pressure on the government’s fiscal balance since 2015/16. 

This was then followed by four budgets without major changes but also without adequate relief for the impact of inflation. 

Cumulatively, effective tax rates have increased significantly over the past decade, Koekemoer said.

For example, the effective rate on income of R250,000 in 2014 was 15%. In 2024, this rate has increased to 18.2%. This is a 21.3% change in the effective tax rate over 10 years.

While the value-added tax rate has only been raised once in South Africa’s history, it has seen a 7.1% effective tax rate change since 2014.

The table below shows the cumulative effect of these tax increases and bracket creep. 


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