Big tax hikes to look out for in 2026
South African taxpayers face another round of tax hikes in 2026, with the National Treasury’s plan to collect an additional R20 billion in tax revenue contingent on the success of SARS’s collection efforts.
If the South African Revenue Service fails to collect the additional R20 billion to R50 billion it has targeted for this financial year, taxpayers may face more stealth taxes, higher fuel levies, or even a dreaded VAT hike.
According to Finance Minister Enoch Godongwana, the National Treasury has not yet decided on whether the R20 billion will be included in the budget.
South Africans at large will only find out when the next budget is tabled in February 2026.
Presenting the Medium-Term Budget Policy Statement (MTBPS) in November, Godongwana stated clearly that the R20 billion in additional tax measures pencilled in at the 2025 Budget could be withdrawn.
But this depends on SARS.
“As indicated in the 2025 Budget, an additional R4 billion was allocated to SARS. This allocation was intended in part to strengthen debt collection, and thereby increase revenue collected by between R20 billion and R50 billion per year,” he said.
“We will continue to monitor SARS’s revenue performance for the remainder of the year. This assessment will inform whether the R20 billion in additional tax increases for the 2026 Budget, as earlier proposed, can be withdrawn.”
The good news for taxpayers is that SARS has recently announced higher-than-anticipated revenue collection for the current financial year, exceeding R18 billion.
The bad news for taxpayers is that this surplus came from various sources, including higher corporate income tax, the increased fuel levy, and the NT’s income tax measures, such as not adjusting tax brackets.
There were also higher PAYE collections from Two-Pot withdrawals, as taxpayers sacrificed their retirement savings for an immediate financial boost.
SARS’s data for the first six months of the year showed that debt collections—where it planned to find the additional R20 billion—remained below May 2025 estimates, undershooting by around R700 million.
What happens if SARS doesn’t collect enough tax?
While SARS remains confident that it will meet its collection goals, there is a real risk that the taxpayers will be saddled with an additional R20 billion in taxes in 2026.
According to tax experts, the source of the R20 billion could come from various sources.
The most straightforward and most obvious source of additional taxes is a VAT hike. While the VAT hike was the centre of 2025’s budget mess, this remains the only major tax pool the NT can draw from.
Godongwana has repeatedly noted that South Africa’s corporate taxes are too high and globally uncompetitive, and that personal income taxes have already pushed past their limits.
The country’s VAT rate, at 15%, however, is lower than that of most other countries. This was the rationale behind the initial proposal to increase it to 17% this year.
Renowned economist Dawie Roodt previously warned that, unless the government cuts spending, it will continue to find sources of additional revenue to finance an expanding budget, and a VAT hike will be inevitable.
He added that cutting spending would be political suicide for the ANC. This means a VAT increase is only a matter of time, despite widespread opposition to it.
A VAT hike would likely prove too contentious in an election year like 2026, so alternative sources for the R20 billion would need to be found.
This could result in a repeat of stealth taxes, such as those in 2025, where tax brackets were not adjusted for inflation, and medical aid tax credits faced the same fate.
Treasury could also again hike the general fuel levy, the Road Accident Fund levy and other smaller taxes to wring out as much as possible from taxpayers to cover any gaps.
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