NOORDWESTER – LICHTENBURG - Economist Dawie Roodt recently said that South African taxpayers typically only get 5 cents of value from the government for every R1 they pay to the South African Revenue Service (SARS). He explained that personal income taxes generate the most revenue for the state. However, these taxpayers get very little in return.
In South Africa, 978 140 people, or 1.5% of the population, pay 60.9% of all personal income tax, the government’s biggest revenue generator.
Even more concerning is that only 235 542 South Africans, or 0.4% of the population, pay 33% of all personal income tax.
This means that the middle- to high-income groups in South Africa pay most of the personal income taxes collected by the revenue service. These taxpayers receive very little in return for their contribution, as most of the money is spent on citizens who do not pay income tax.
Roodt created a comparison to establish the value these taxpayers receive in return for the money they give to the government.
He highlighted that he had to make assumptions for this calculation, including that the state does not waste resources. “I know this is not the case. Due to corruption, incompetence, and mismanagement, there is a lot of wastage in the government,” he said. However, even with this assumption, a household with an income of R1 million per year will get less than 5% of the value they pay in taxes.
Put differently - for every R1 this family pays in taxes, it will receive less than 5 cents in value from the government.
Roodt highlighted that one of the most significant problems with South Africa’s current situation is its over-reliance on rich individuals for tax revenue. “If one rich individual leaves South Africa, the state loses funding for a large number of poor families,” Roodt said.
There is an additional problem – high-income earners are typically highly skilled and industrious, and the country cannot afford to lose these skills. “If one of these people decides to emigrate, South Africa loses their skills and their valuable tax revenue,” he explained.
The reality is that thousands of these valuable individuals are leaving South Africa every year. “We are losing these rich people,” he said. “These people are going overseas because they have more opportunities there and they don’t have to worry about safety concerns.”
Another problem is that these people pay very high taxes and get very little in return. The government even targets them despite their contributions.
The latest United Nations migrant data shows that 108 000 South Africans emigrated between 2020 and 2024, averaging 27 000 yearly, or 74 people leaving daily. The UN’s “International Migrant Stock” data further showed that just over 1 million South Africans are living abroad.
In 1990, just under 295 400 South Africans were living internationally. By 2000, this increased to around 495 000, hitting 705 000 by 2010.
In 2020, the number of South Africans living abroad hit just under 900 000 – below the UN’s previous estimates – and surpassed 1 million in 2024.
