Government’s Biggest Bite Yet: Tax-to-GDP Ratio Hits Record High as SARS Takes More

The government is taking more money from South Africans than ever before.

Finance Minister Enoch Godongwana delivered his 2026 Budget on 25 February, revealing that tax collections exceeded expectationsand that the tax burden on citizens and companies has reached a historic high.

The Numbers

South Africa’s tax-to-GDP ratiothe total tax payments for a fiscal year as a percentage of GDPincreased from 25.1% in the 2025 financial year to 25.9% in 2026.

It is expected to reach 26.2% by 2028/29 as economic growth improves.

The tax-to-GDP ratio measures the overall tax burden. The higher the percentage, the bigger the bite.

The Government’s View

Godongwana framed the increase positively.

“Despite challenging economic conditions, South Africa’s tax system has performed well,” he said in the Budget Review.

“Sustained investment and economic growth, and further improvements in tax administration, would support higher revenue collection.”

The Critic’s View

But critics see a different picture: the government is extracting more money from the economymoney that could have been spent by citizens and companies.

South Africa’s government has a well-documented history of mismanagement, corruption, and poor capital allocation. In short, a large portion of taxpayers’ money is wasted.

Pay Less, Says Economist

Renowned economist Dawie Roodt has previously advised South Africans to pay as little tax as legally possiblearguing that it is good for the economy.

“I encourage people not to break any laws but to make use of every possible loophole to pay as little tax as possible in South Africa,” he said.

“One rand in your pocket is worth much more than one rand in the pocket of the civil servants and the government.”

The Spending Problem

Roodt argues that the only way to stop politicians from excessive spending is to give them less money.

Politicians are under immense pressure to maintain or increase spending, making it difficult to implement fiscal discipline. He pointed to the Social Relief of Distress grantoriginally a temporary pandemic-era measurewhich is still being paid.

“There is nothing as permanent as a temporary state expenditure item. Politicians find it nearly impossible to stop such programs once they are established.”

The Wage Bill

South Africa faces a ballooning civil service wage bill, with services delivered often of very low quality.

“The state is a massive destroyer of capital, often borrowing long-term money to fund short-term current expenditure. This has led to a situation where South Africa pays nearly R14,000 per second in interest on outstanding debt.”

The Bottom Line

The tax-to-GDP ratio is at a record high. The government is taking more. And the money, critics say, is being wasted.

For taxpayers, the message is simple: you’re paying more than ever. The question is whether you’re getting value for it.

{Source: DailyInvestor}

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