R22bn shortfall in budget

'Wealth tax on rich may not yield required revenue.'

- Ina Opperman

With the budget speech tomorrow and a tax collection shortfall expected to be in the region of R22 billion, Finance Minister Enoch Godongwana will be looking for ways to boost tax collection without slowing down the economy and negatively affecting households.

Will he come for the rich with a wealth tax?

According to the tax statistics for 2024, personal income tax made up 37.4% of the total revenue collected.

Although this was down from 39% in the 2020 fiscal year, personal income tax remained the largest contributor to the tax revenue, Zohra de Villiers, partner for Global Mobility Services and Employment Tax Advisory at KPMG South Africa said.

About 7.5 million individual taxpayers contribute to the personal income tax revenue.

De Villiers pointed out that a further analysis reflects that only about 500,000 individuals contribute 50% of these taxes.

"This small group comprises taxpayers with taxable income in excess of R1 million per year and it includes foreign nationals seconded to South Africa to work for a limited period."

She said a wealth tax will therefore only be applicable to a small number of high-income earners.