South Africans are taxed to death

Efficient Group chief economist Dawie Roodt said that South Africans are now paying more tax than ever, with the tax-to-GDP ratio hitting 30% for the first time.

Roodt shared this information in an interview with The Truth Report, where he discussed South Africa’s tax regime.

He said that all South African political parties promise to spend public funds better. However, none of them promises to spend less.

They have no plan to cut government spending and, as a result, reduce the tax burden on individuals and businesses.

To fund continued spending, Roodt said the Finance Minister gave the South African Revenue Service (SARS) additional resources to collect more tax revenue.

“The state is squeezing every remaining drop of value out of taxpayers and businesses, driving up the tax burden,” he said.

He explained that the tax-to-GDP (gross domestic product) ratio hit 30% for the first time in South Africa’s history.

The tax-to-GDP ratio measures the overall tax burden. The International Monetary Fund (IMF) and the World Bank use this ratio to compare countries’ tax systems.

South Africa’s tax-to-GDP ratio increased from 20.2% in 1994 to 25.1% in 2024, which means the country’s tax burden is increasing.

Hitting 30% this year means the tax burden is significantly higher than it was just a few years ago.

“Today, South Africans pay the most tax in the history of South Africa,” Roodt said in The Truth Report discussion.

“Politicians just spend too much money. South Africans simply cannot afford to pay so much money anymore.”

He added that taxpayers get less value from the government than ever before, which created negativity towards taxes.

Tax revolt in South Africa

Roodt said that there is a tax revolt in South Africa. “People are very aggressively pushing back. People immigrating is a form of tax revolt,” he said.

“People are also lying about their taxes or stopping working. I know people who have stopped working, saying, ‘It is not worth it. I can’t pay half of my salary to SARS.’”

Roodt explained that it is not just about the tax burden. It is the value that people get from the tax they pay.

He proposed an overhaul of South Africa’s tax regime to make it simpler. “It must be the least complicated tax regime in the world,” he said.

“You would still have personal income tax, but I would reduce it so it is the only income tax. No deductions and no rebates.”

“I would also propose a straightforward Value Added Tax (VAT) with no zero-rated items. If you want to address poverty, do it on the expenditure side of the budget.”

Roodt also proposed doing away with sin taxes, as it is not the government’s job to tell people what they should and should not do with their money.

Another thing he would change is exchange controls. He said the government should not dictate where South Africans put their after-tax money.

“I get an allowance of R2 million a year that I’m allowed to take out of the country without asking for permission,” he said.

“That’s my money. I’ve worked for that, and I’ve already been overtaxed on it. Now I have to ask permission from someone else to take the money out?”

“Technology is running away from these guys. Your job is to protect me and my stuff. Your job is not to make my life more difficult.”