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South Africa's Shrinking Tax Base Raises Concerns

South Africa's tax base has dwindled over the past decade despite substantial growth in government tax revenue, indicating potential financial strain ahead.

Taxes make up the largest portion of government revenue, with the National Treasury reporting R1.73 trillion in tax revenue for 2023/24 out of R1.92 trillion in total revenue. The main tax sources are Personal Income Tax (PIT), Value-Added Tax (VAT), and Corporate Income Tax (CIT), each experiencing significant growth between 2014 and 2023.

However, the number of taxpayers has decreased by nearly 7% over the same period, partly due to high-earning individuals leaving the country to escape rising tax burdens. This trend raises concerns as government revenue and expenditure continue to rise.

Only 12% of South Africa's population pays personal income tax, with a small fraction of high earners contributing the majority of tax revenue. Similarly, a few hundred companies pay the bulk of corporate income tax.

This situation highlights the growing disparity between revenue generation and taxpayer numbers, necessitating careful consideration and strategic solutions to ensure financial stability in the future.

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