AFRICA: Tax revolt in South Africa is already happening

South African taxpayers have historically been successful at resisting forced government policies they deem unjust—and failing that, thousands have just called it quits on the country altogether.

South African taxpayers are already significantly overburdened – with the government’s demands for more revenue piling added pressure onto a strained and tiny tax base.

While the country has over 24 million registered taxpayers in a population of over 60 million people, only a fraction of this—around 5 million—account for the bulk of taxes.

Despite this, the ANC-led government has promised that this tax base will foot the bill free ‘quality’ and ‘comprehensive’ healthcare and a monthly stipend in the form of a basic income grant. This is over and above paying for the plethora of other deteriorating public services.

One of these promises has already been followed through by President Cyril Ramaphosa, who signed the National Health Insurance (NHI) into law in May. The foundation for the BIG has already been laid with the R370 Social Relief of Distress grant, which has been extended to 2025 (and likely beyond).

Both of these ambitions will require billions of rands to implement, with the NHI estimated to cost at least R200 billion a year to run (conservatively) and the SRD grant costing close to R40 billion a year to maintain on an already-strained budget.

The government has made it clear that taxpayers will cover this.

The NHI foresees tax hikes down the line in the form of payroll taxes, income tax surcharges and removing medical aid tax credits. It has been proposed that a wealth tax be implemented to fund the BIG.

The government may find, though, that taxpayers might not be happy to cover these costs—and some may not stick around to see them become a reality.

Especially not while the government continues to spend collected taxes so poorly that it actively damages the economy and fails to create any value.

Tax revolt

South African taxpayers have successfully revolted against what they perceive to be unjust government tax collections on several occasions.

The most recent tax revolt that proved a success was the snuffing out of e-tolls in Gauteng, where almost 90% of motorists—who were obligated by law to pay toll fees for using critical main routes on Joburg’s freeways—simply did not.

This led to the failure of the system on a fundamental level, where the toll collectors were unable to pursue motorists for not paying, and the Constitutionality of the system was never fully tested in court.

After 11 long years of pushback since its launch—and the ANC government’s refusal to accept defeat—the system was finally killed off in early 2024, leaving a massive dent in the country’s budget, and the Gauteng provincial government saddled with billions of rands in debt.

A much longer tax revolt is still ongoing with the SABC and TV Licences. All TV owners are required to have a licence and pay the annual fee of R265.

As with e-tolls, though, around only 13% of South Africans are actually compliant, and historical TV licence debt has also climbed to over R44 billion, with at least 9.2 million defaulters as of last year.

Despite the outright rejection of this taxing policy, the SABC and the national government are still seeking ways to extract funding from TV users.

In 2020, the SABC controversially proposed requiring a TV licence for all devices that can access its services, including Internet-connected products like smartphones, tablets, and laptops.

In 2021, it changed its stance. Instead, the broadcaster proposed replacing the TV licence with a household broadcasting levy as part of its submission on amendments to the Broadcasting Act, otherwise referred to as the SABC Bill.

As it stands, this is still the supported proposal, but how it aims to actually collect this fee is still up in the air.

The biggest tax revolt

However, the biggest and most impactful tax revolt in South Africa has been taxpayers simply calling it quits and leaving.

Close to 1 million South African citizens have emigrated to other countries, with over 170,000 having left in the past decade.

Worryingly, these leavers represent a significant number of wealthy and skilled individuals. Migration patterns among South African millionaires show that thousands have left over the past 10 years, something which has been noted by SARS.

Tax data over the past few years shows that it’s not only the ‘super’ wealthy who are leaving, though.

Since the 2017 tax year, more than 40,500 taxpayers indicated that they ceased to be tax residents of South Africa for the tax years 2017 to 2021.

Tax experts have noted that taxpayers from lower-income brackets are also changing tax residency – which is likely reflective of taxpayers making the decision to end tax residency from a younger age.