Budget 2026: Taxpayers Need Relief

South African taxpayers are badly overstretched. On Wednesday, finance minister Enoch Godongwana will deliver his 2026/2027 Budget Speech. Taxpayers will be looking for some relief – but will the Minister answer the call for lower taxes?

Godongwana had a mixed year in 2025.

In February, he had a difficult time of things over his proposed two percentage point VAT increase. His speech was abandoned at the last minute when the Democratic Alliance (DA) refused to vote for his Budget in Parliament. After much to-ing and fro-ing, the VAT increase was scrapped, and the Budget was eventually passed at the third attempt in May.

Although I am often critical of the DA’s participation in the Government of National Unity, this was the high-water mark of the former official opposition’s tenure in the unity government. Putting up internal resistance to the worst excesses of the African National Congress was what many DA voters were hoping it would do once inside the national government.

It is worth noting, however, that the resistance appeared to come mostly from the DA’s parliamentary caucus, and not from within the Cabinet.

In November, when Godongwana delivered his Medium-Term Budget Policy Statement (MTBPS), the outcome was different. Here he projected the consolidated budget deficit to decline from 4.8% to 4.5% and for the government to record a primary budget surplus of 0.9%. Although Godongwana expected debt to remain high at 77.9%, at least the overall debt burden was not growing, he argued.

The “mini”-Budget was met with praise. But that was last year. What will happen this year?

A heavy burden to bear

While a balanced budget is to be welcomed, South African taxpayers are – like Atlas – still carrying the rest of the country on their shoulders.

According to data from the South African Revenue Service (SARS), out of the 27 million registered individual taxpayers in 2024, about 7.7 million were assessed taxpayers. Of these, only 19.6% earned more than R500,000 (what we could broadly define as earning a middle-class income). These 1.51 million individuals contributed 77% of all personal income tax assessed, paying approximately a quarter of the state’s revenue bill.

This week, Statistics South Africa revealed in its Quarterly Labour Force Survey that unemployment had reduced by half a percentage point from 31.9% in the third quarter of 2025 to 31.4% in the fourth quarter. That is a modest improvement, but the fact remains that there are more unemployed people in South Africa (7.8 million) than there are assessed taxpayers (7.7 million).

What’s more, there are over 28 million welfare grants distributed monthly, including the 8.7 million Social Relief of Distress (SRD) grants originally introduced during the Covid-19 pandemic (Milton Friedman was right: “Nothing is so permanent as a temporary government programme”).

There is a reason why our Members of Parliament applaud enthusiastically whenever the President celebrates the high number of grant recipients. Not because they are empathetic altruists, but because welfare engenders dependency on the government and buys political loyalty.

As I argued last week, poverty and unemployment are the direct result of South Africa’s public policy choices. Social grants are nothing more than a palliative remedy by the state to these state-created problems.

The taxman cometh

One of the reasons why the Minister of Finance has been so successful in balancing his books is because of the aggressive push by SARS to improve revenue collection. Many commentators celebrate South Africa’s tax authority as “world class”, but taxpayers can be forgiven for being somewhat less enthusiastic about their hard-earned money being hoovered up by a corrupt and wasteful government.

It says something about the health of a society if the most “effective” institution is the one tasked with ensuring taxpayers provide more money to the other, obviously inept and corrupt institutions!

Many tax practitioners complain of overzealous treatment by SARS officials who go to great lengths to delay or avoid paying tax refunds and unreasonably demand reams of compliance documentation from beleaguered taxpayers.

Insatiable appetite

Of course, the state is not content to simply tax your income.

Buying a house to shelter your family? Not before you pay those transfer duties.

Investing your meagre after-tax income for your future retirement? How about some capital gains tax.

Want to transfer your hard-earned assets to your family when you pass away? Estate duties. (As George Harrison wrote: "Now my advice for those who die / Declare the pennies on your eyes.”)

Looking to take the edge off with a rum and Coke and a smoke at the pub? Your tab is just a little more expensive thanks to so-called “sin taxes”.

Filling up at the petrol station? Pay your fuel levies to the bankrupt and dysfunctional Road Accident Fund.

The state is a rapacious tax-guzzling monster whose hunger is never satiated.

Who will represent the taxpayers?

One would think that more political parties would be making hay out of taxpayers' growing frustration with the status quo.

Alas, no. Politicians across the spectrum take taxpayers for granted.

The DA-run City of Cape Town might be the best governed of the big metros, but recent rating changes have resulted in higher fees for properties valued above R1.5 million and ‘City-wide cleaning charges’ are further straining ratepayers.

Meanwhile, the City is proposing to increase levies on short-term property rentals (such as Airbnb and Booking.com) by charging commercial rather than residential rates. This could mean that rates on these properties could jump by as much as 135%, a move that could stifle Cape Town’s burgeoning short-term rental market and tourism industry more broadly.

It is striking that the only politician talking about tax relief is the Electricity and Energy Minister, Kgosientsho Ramokgopa, who has proposed suspending South Africa’s carbon tax. He is quite right to do so: South Africa should not be sacrificing its natural advantage in coal power at the altar of a misguided “Net Zero” target.

For any talk of reform to be taken seriously, South African taxpayers need to be granted more substantive tax relief in next week’s Budget. Their patience is running thin.

Ansara is CEO of the Free Market Foundation.