3% of people in South Africa pay 76% of all personal income tax

South Africa’s latest Tax Statistics report revealed that 1,660,182 people pay 76.2% of all personal income tax.

Considering that the country has around 64 million people, it means that 2.6% of people pay most personal income tax in South Africa.

This data was included in the 2024 tax statistics report released by the National Treasury and the South African Revenue Service (SARS).

The report revealed that in the 2023/24 fiscal year, SARS collected R2.2 trillion in gross tax revenue.

The 2023/24 fiscal year saw a sharp decline in Company Income Tax (CIT) revenue, particularly in the mining sector.

Value-Added Tax (VAT) revenue growth remained subdued as consumers continued to face financial constraints.

However, personal income tax (PIT) revenue remained buoyant, supported by a recovery in employment and earnings.

The data revealed that by 31 March 2023, the PIT register had grown annually by 4.5% to 25.9 million individuals and by a further 4.3% to 27.1 million at the end of March 2024.

The number of individuals expected to submit income tax returns was 7.6 million for the 2023 tax year.

Assessed taxpayers reported an aggregated taxable income of R2.3 trillion with a tax liability of R499.9 billion.

There is one concern. South Africa’s personal income tax base is highly concentrated with a small number of individuals paying most of the tax.

The report revealed that South Africa had 1,660,182 people who earned over R500,000 per year, with a taxable income of R1.5 trillion.

The report further showed that this small group of people, accounting for under 3% of the population, pay 76% of all PIT.

Many economists, including Eunomix economist Claude de Baissac, have warned that South Africa is too dependent on taxes from rich citizens, who are leaving the country.

De Baissac said a large part of personal income tax comes from higher-income earners and that working-class taxpayers are disappearing.

Wealthy South Africans – and increasingly the middle class – are paying taxes for services like education and healthcare, which they do not receive from the state.

This strategy is unsustainable because wealthy South Africans are mobile and are leaving the country in droves.