South Africa has 7.9 million taxpayers funding 28 million grant recipients

The 2025 Budget revealed that South Africa’s 7.9 million personal income taxpayers fund 28 million grant recipients.

Finance Minister Enoch Godongwana delivered his 2025 Budget Speech in front of the National Assembly on Wednesday, 12 March 2025.

Godongwana said the 2025 Budget aims to raise an additional R28 billion in 2025/26 and R14.5 billion in 2026/27.

Most of this money will be raised through a 0.5 percentage point increase in value-added tax (VAT) and no increases in personal income tax brackets.

There will also not be changes to medical tax credits. They will remain at R364 per month for the first two beneficiaries and R246 per month for the remaining beneficiaries.

Not adjusting the tax brackets, rebates, and medical tax credits for inflation is expected to raise revenue of R19.5 billion.

This means that South African personal income taxpayers will pay significantly more to the state in real terms.

The reason for the higher taxes is South Africa’s sluggish economic growth, which caused higher unemployment and citizens getting poorer.

To address the pressure on poorer households, Godongwana significantly increased social grants, to which he allocated R284.7 billion.

The old age and disability grants increased by R130 to R2,315, child support grants increased by R30 to R560 per month, and foster care grants rose by R70.

The COVID-19 social relief of distress (SRD) grant, in its current form, will be extended by a year to end March 2026. R35.2 billion is allocated for this purpose.

The finance minister said the social relief of distress grant will be used to introduce a sustainable form of income support for unemployed people.

The future form and nature of the grant will be informed by the outcome of the review of active labour market programmes, expected to be completed by September 2025.

Godongwana said nearly 28 million beneficiaries will access social grants. This is one of the most comprehensive social safety nets among emerging economies.

“This reflects our commitment to addressing poverty and inequality while keeping our spending sustainable,” he said.

7.9 million taxpayers funding 28 million grant recipients

Last month, President Cyril Ramaphosa praised the government’s pro-poor policies in his State of the Nation Address (SONA).

He celebrated the fact that more than 28 million South Africans receive monthly social grant payments.

However, there is a challenge. Most of these people receive grants because they are unemployed and do not have a stable income.

Instead of growing the economy and encouraging job creation through business-friendly policies, the government added more pressure on the very narrow tax base.

The 2025 Budget revealed that the government will spend R422.3 billion on social development, with most of the money going towards grants.

It will spend R117 billion on old-age grants, R100 billion on social security funds, R90 billion on child-support grants, and R77 billion on other grants.

The 2025 Budget further revealed that South Africa only has 7.888 million personal income taxpayers, significantly less than the grant recipients.

Even more concerning is that less than 1 million South Africans pay over 60% of personal income tax.

These are the same people who own or run businesses, create employment, and ensure the South African economy grows.

The government is now exerting tremendous pressure on this very narrow tax base, which is causing many to leave the country.

“Many rich and successful people are leaving South Africa. We are losing our taxpayers,” renowned economist Dawie Roodt said.

The situation is unsustainable, which is why Roodt and many other economists are calling on the government to focus on economic growth.

Instead of celebrating the number of grant recipients, the government should focus on creating jobs and, therefore, more taxpayers.

This is the only way South Africa will be able to address its large budget deficit, which includes R424.9 billion in annual debt-servicing costs.

The table below shows the estimates of individuals and taxable income for the 2025/26 financial year.