South Africans who earn above R1 million pay half of all income tax

Finance Minister Enoch Godongwana said South Africa has a highly progressive personal income tax system, where rich people pay most of the tax.

Godongwana shared this information in response to a Parliamentary question from Pinky Mngadi about South Africa’s tax regime.

Mngadi asked the Minister how the 2026 Fiscal Framework and Revenue Proposals reflect progressive taxation.

He explained that the 2026 Budget Review demonstrated that South Africa’s personal income tax system already is highly progressive.

“The top 13% of individual taxpayers with the highest incomes contribute over 60% of total personal income tax revenue,” he said.

“Almost half of personal income tax is paid by the top 8% of taxpayers with taxable income above R1 million per year.”

Godongwana said that this indicates a narrow personal income tax base, which is dependent on a small number of high-income taxpayers.

Mngadi also asked the Minister about realignment with the international financial system around human rights principles.

She highlighted the need for equity and gender equity, transparency, non-discrimination, and maximum available resources.

He responded, saying equity, transparency and revenue adequacy are important tax policy design principles that underpin annual revenue proposals.

“While not every tax instrument needs to satisfy all the tax policy design principles, it is important that the tax system as a whole meets these objectives,” he said.

Personal income tax is an example of an instrument that should have a heavy focus on equity in its design.

“This ensures that those of similar means pay the same, while those who earn more pay more,” Godongwana said.

In comparison, VAT is more of a revenue-raising instrument, and it is not suited to address equity concerns in its design.

“Revenue raised from all tax instruments is far more effective at reducing inequality when channelled into spending programmes that target those most in need,” he said.