South Africa tax vs GDP: 1994 – 2014

Finance Minister Nhlanhla Nene has announced the tax numbers for the 2014/2015 financial year, with total tax collection beating expectations.

According to Nene, total tax collected in the financial year hit R986.4 billion, beating the 2015 budget estimate by R7.4 billion.

The figure also represents a 9.6% increase in tax revenue from the 2013/14 period, where just over R900 billion was collected.

Nene said that reports from SARS indicated that personal income tax, corporate tax and VAT were the key drivers of the tax revenue boost, with the minister calling the revenue services an “efficient, stable institution”.

  • Personal Income Tax total collections were R353.8 billion, R3 billion – or 0.9% – above the revised estimate of R350.7 billion.
  • Company Tax collections were at R186.9 billion – R2.3-billion (1.2%) above the revised estimate of R184.6-billion.
  • VAT collections were at R261.1 billion, R500 million – or 0.2% – higher than the revised estimate of R260.6 billion.

According to Nene, the 2014/15 tax collection target is set at R993.6-billion, based on real GDP growth of 2.9%.

Over the last two decades, tax revenue has become one of the largest contributors to the country’s GDP, accounting for over a quarter of the total economic contribution.

According to Stats SA, South Africa’s nominal GDP was estimated at R3.8 trillion in 2014 (up 10.2% from 2013). Tax revenue in 2014/15 accounted for 25.4% of GDP, Nene said.

Real GDP at market prices, however, increased by only 1.5% in 2014 following an increase of 2.2% in 2013.

Historically, tax revenue has always accounted for between 22% and 28% of the country’s GDP.

The following table looks at the Nominal GDP and tax revenue over the past 20 years (Figures in ZAR millions).

Nominal GDP vs Tax
Nominal GDP vs Tax
Year Nominal GDP Tax revenue  % of GDP
1994 497 189 113 775 22.9%
1995 564 159 127 278 22.6%
1996 635 187 147 332 23.2%
1997 699 825 165 327 23.6%
1998 757 087 184 786 24.4%
1999 837 241 201 266 24.0%
2000 951 736 220 119 23.1%
2001 1 048 506 252 295 24.1%
2002 1 203 145 281 939 23.4%
2003 1 303 907 302 443 23.2%
2004 1 449 020 354 979 24.5%
2005 1 613 812 417 196 25.9%
2006 1 832 762 495 549 27.0%
2007 2 075 413 572 815 27.6%
2008 2 296 571 625 100 27.2%
2009 2 456 629 598 705 24.4%
2010 2 749 532 674 183 24.5%
2011 2 981 828 742 650 24.9%
2012 3 198 579 813 826 25.9%
2013 3 448 980 900 015 26.1%
2014 3 883 464 986 373 25.4%
Tax as a percentage of GDP
Tax as a percentage of GDP

The following table looks at Nominal GDP, Real GDP and tax revenue growth over the past 20 years.

Nominal and Real GDP growth vs Tax growth
Nominal and Real GDP growth vs Tax growth
Year Nominal GDP growth Real GDP growth Tax revenue growth
1995 13.5% 3.1% 11.9%
1996 12.6% 4.3% 15.8%
1997 10.2% 2.7% 12.2%
1998 8.2% 0.5% 11.8%
1999 10.6% 2.4% 8.9%
2000 13.7% 4.1% 9.4%
2001 10.2% 2.7% 14.6%
2002 14.7% 3.7% 11.7%
2003 8.4% 3.0% 7.3%
2004 11.1% 4.6% 17.4%
2005 11.4% 5.3% 17.5%
2006 13.6% 5.6% 18.8%
2007 13.2% 5.6% 15.6%
2008 10.7% 3.6% 9.1%
2009 7.0% -1.5% -4.2%
2010 11.9% 3.1% 12.6%
2011 8.4% 3.6% 10.2%
2012 7.3% 2.5% 9.6%
2013 7.8% 2.2% 10.6%
2014 10.2% 1.5% 9.6%

South Africans in all but the lowest tax brackets can expect to see their taxes go up (1 April 2015).

In presenting his first main budget in the National Assembly in February, Nene announced that citizens would see a slight dent in their pay packets from April 1, with personal income tax rates being raised by one percentage point for all taxpayers earning more than R181,900 a year.

“This raises tax by R21 a month for a taxpayer below the age of 65 with an annual income of R200,000. Those earning R500,000 would pay R271 a month more, and at R1.5 million a year the tax increase is R1105 a month,” Nene said.

Tax brackets, rebates an medical schemes and medical aid contributions would however be adjusted for inflation.

“The net effect is that there will be tax relief below about R450,000 a year, while those with higher incomes will pay more in tax,” said Nene.

The tax-free threshold for individuals would increase from R70,700 to R73,650.

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South Africa tax vs GDP: 1994 – 2014