‘Supertax on wealthy earners could be reintroduced’

Deloitte commentators share their budget expectations.

JOHANNESBURG – The coming tax year will be a “watershed year” for tax hikes, which will likely come from a wide range of sources, a tax specialist has warned.

Speaking at a Deloitte budget roundtable, Nazrien Kader, head of taxation services, said when finance minister Pravin Gordhan takes to the podium for the first Budget Speech of his new term, he will have to walk a tightrope of a nature no local finance minister has ever had to in the past.

Since the Medium-Term Budget Policy Statement (MTBPS), South Africa’s economic growth prospects have deteriorated considerably. Earlier this month, the International Monetary Fund (IMF) slashed its growth outlook for the year to 0.7% from an earlier 1.3%, suggesting that revenue collection could come under severe pressure going forward.

Moreover, ratings agencies will be keeping a watchful eye on South Africa’s finances. Commentators have warned that the country’s sovereign credit rating may be downgraded to junk later this year – a situation the minister will want to avoid at all costs.

“I think the challenge to minister Gordhan is to generate taxes without penalising growth or exacerbating inequality,” Kader said.

Armchair budget observers would also be watching the budget carefully to evaluate the consistency in messages from the commissioner of the South African Revenue Service (Sars), Tom Moyane, and the minister of finance. This follows after Gordhan, a former commissioner himself, reportedly halted Moyane’s efforts to restructure the revenue authority, she said.

While taxpayers expect the minister to introduce additional measures to curb spending, fight corruption and reduce wastage, Gordhan will also be under pressure to instill confidence among foreign investors, who were alarmed by the sacking of former finance minister Nhlanhla Nene in December.

Personal income tax, value-added tax (VAT) and corporate income tax are the most significant contributors to state coffers and potential hikes in these areas would generally offer the biggest opportunities for additional revenue collection, although it would have to be weighed against the broader economic impact.


Kader said current economic conditions suggest that a supertax bracket will be reintroduced.

A supertax was also levied in the 1980s, but the bracket was adjusted downwards after a recommendation by the Katz commission.

Kader said a bracket of 43% to 45% could be announced. High-income earners currently pay a rate of 41% on their taxable income above R701 300.

The rate will likely be lowered again within three years, as South Africa’s finances stabilise, she said.

Billy Joubert, tax director and transfer pricing leader, warned however that any suggestions of personal income tax hikes must be accompanied by a serious commitment to curb wasteful spending.

Kader said the inclusion rate for capital gains (currently 33.3% for individuals) might also be increased. There could be scope to increase the rate to possibly include half or even two-thirds of capital gains as taxable income.

With respect to the implementation of a so-called wealth tax, as advocated by French economist Thomas Piketty, Kader said it was premature. South Africa is not in a position that allows for the implementation of an official wealth tax although an increase in the capital gains tax inclusion rate and a marginal tax rate hike may already signal a step in this direction.

A hike in sin taxes is also expected, which will likely be much higher than inflation, while ad valorem taxes on luxury goods may also be adjusted upwards, Kader said.


While many tax professionals have advocated a VAT rate hike for quite some time, Kader did not expect an adjustment in this regard.

Severus Smuts, indirect tax leader, said against the current political background government wouldn’t take the risk of increasing the VAT rate, as it would be a “step too far”.

Cosatu, which vehemently oppose a VAT hike, is already at loggerheads with government about some elements of the retirement reform legislation, which will come into effect on March 1.

Smuts said if the VAT rate was adjusted in future it will likely be for a specific purpose such as funding the National Health Insurance (NHI).


Although government will be mindful of creating a competitive corporate environment, it is conceivable that a special levy – similar to the transition levy that applied in the early days of democracy – will be applied to companies with a turnover above a certain threshold (for example R1 billion), Kader said.

This levy could be between 5% and 7%.

“I think multinational companies should perhaps brace themselves.”



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and so all SA’s problems will be solved!
what a relief, a solution as simple as that.

…”The rate will likely be lowered again within three years, as South Africa’s finances stabilise”, she [Kader] said. No way will they reduce any tax where the well-off get hammered.

yes, what if the finances/economy doesn’t “stabilize” ? ( which it probably won’t )

This is how I see it. I choose to bake a pie and I’m forced to give some of it away. At first I don’t mind but over time I’m forced to give more of my pie away . Eventually I realize that its easier to collect pie from other people than actually bake a pie myself. And so we have increasing taxes, tenderpreneurs, and an exploding government wage bill.

During my career one always came back to the same narrative – what is the value add as a result of your actions, no value add cheers find a career elsewhere. This principal applies with SARS and Treasury where is the value add – I don’t see any so they need to address the wholesale theft and wanton spend of taxpayers monies before raising taxes. I have all these XXX must fall as they are really meaningless slogans but since we are in the realms of these slogans may I add 2 – Government must fall and Taxes must fall

Why do tax experts always think the vat rate might be raised.It’s not going to happen.The unions run the country and they won’t allow it!

I am sick and tired of the government always thinking that raising taxes is the solution! How about stopping the corruption and waste! Stop the tenders for cronies, and the nepotism. Stop wasting our money, Mr Zuma!

Raise VAT. It’s as simple as that. It’s always about the “poor” but don’t forget who employs the poor. How will the poor be able to afford a loaf of bread if their employers leave the country or close shop? But alas, this won’t happen as it will piss off voters even more. (I am just wondering when their tipping point will come… if ever)

But this is South Africa, and the same bunch of greedy morons in government will continue to raise taxes to finance their lavish lifestyles, their poor decisions, and always at the cost of the taxpayers.

We must just pay pay pay pay pay pay. And not to mention our pseudo-tax of privatizing all facets of life that should be provided by the government in some form at least (i.e security, health care, transportation, and education).

I can see the headline now in 2025:
“The ANC have introduced a super-super-duper tax on the wealth, now sitting at 95%.” However, Capital Gains deductions are still at R30 000 per annum.

Give [us] a break already.

1. ‘Wealthy’ in comparison to tax payers or the entire country? Because in comparison to all the other tax payers; nope. In comparison to my gardener; yes.
2. 45% tax + 14% VAT + medical aid + Fuel Levies + eTolls, so your spend for school fees/food/bond etc. needs to come out of the 30-35% that you have left, which with inflation and price increases already buys you 20% less than it did in 2015. Of the 65-70% you’ve paid in taxes, you get (by today’s corruption figures) 15% of your gross going back in to the economy and the rest to corruption, tenderpreneurs, cronyism, Nkandlaism etc.
3. Zuma is possibly the most expensive president we’ve ever had.

BEE was supposed to end after 10yrs. It never did, so why would the super tax?

hmm -“The rate will likely be lowered again within three years, as South Africa’s finances stabilise, she said” she said this did she! – what clairvoyant is she seeing who can forecast sa’s financing stabilising ANYTIME! actually she maybe seeing a sangoma! who is in the pay of the ANC!

End of comments.



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