South Africans earning R1 million or more are paying over half of their income to the government and other related compulsory charges.<\/p>\n\n\n\n
This is despite the fact that these South Africans represent 8% of the tax base but pay over half of all personal income tax (PIT) in the country.<\/p>\n\n\n\n
In response to a Parliamentary question, Finance Minister Enoch Godongwana said South Africa has a highly progressive personal income tax system.<\/p>\n\n\n\n
He explained that the 2026 Budget Review demonstrated that South Africa\u2019s personal income tax system already is highly progressive.<\/p>\n\n\n\n
\u201cThe top 13% of individual taxpayers with the highest incomes contribute over 60% of total personal income tax revenue,\u201d he said.<\/p>\n\n\n\n
\u201cAlmost half of personal income tax is paid by the top 8% of taxpayers with taxable income above R1 million per year.\u201d<\/p>\n\n\n\n
Godongwana said that this indicates a narrow personal income tax base, which is dependent on a small number of high-income taxpayers.<\/p>\n\n\n\n
However, most taxpayers focus only on Pay-As-You-Earn (PAYE) deductions and overlook the many indirect taxes and compulsory costs that steadily erode their disposable income.<\/p>\n\n\n\n
Economists argue that South Africans effectively pay a second layer of costs because many public services fail to meet expectations.<\/p>\n\n\n\n
Efficient Group chief economist Dawie Roodt\u00a0noted that expenses such as school fees, private security and medical aid can be viewed as an additional \u201ctax\u201d on households.<\/p>\n\n\n\n
This is because citizens often pay privately for services that should be adequately provided through taxation.<\/p>\n\n\n\n
According to CambriLearn, the average cost of a respectable private day school in South Africa averages around R130,000 per year. This works out to at least R10,800 a month.<\/p>\n\n\n\n
A mid-tier medical aid, such as Discovery Classic Priority, costs R6,198 per month. This includes unlimited cover at any private hospital and a medical savings account (MSA) funded at 25% of your total contribution.<\/p>\n\n\n\n
This also includes a personal health fund for extra day-to-day healthcare expenses and full coverage for approved medicine on the Chronic Disease List (CDL). <\/p>\n\n\n\n
The cost of private security in South Africa varies widely depending on the service level. Standard armed response averages R475 per month.<\/p>\n\n\n\n
Housing-related charges further reduce disposable income. Banking guidelines indicate that housing costs should not exceed 30% of gross monthly income.<\/p>\n\n\n\n
This means that someone earning R83,333 a month could typically qualify for a home valued at around R2.5 million in the City of Tshwane.<\/p>\n\n\n\n
Tshwane provides a R250,000 valuation reduction exemption for residential primary properties. You only pay rates on the remaining R2.25 million value of your home.<\/p>\n\n\n\n
After accounting for the municipality\u2019s residential rates rebate, property rates on such a home would amount to roughly R2,198 a month.<\/p>\n\n\n\n
Refuse removal for a standard 240L municipal bin costs about R389 monthly, while VAT on R2,000 worth of electricity adds around R261.<\/p>\n\n\n\n
Sewerage charges for a typical household using 15 kilolitres of water a month would add another R252 to the bill.<\/p>\n\n\n\n
While someone may believe they are paying an effective tax rate of around 41% through PAYE, the reality is far different once other taxes and charges are considered.<\/p>\n\n\n\n One of the biggest contributors is VAT, which applies to a wide range of goods and services purchased daily.<\/p>\n\n\n\n South Africans pay VAT on restaurant meals, electricity, clothing, household goods and numerous services. VAT alone is 15%, meaning households are constantly paying additional tax on everyday spending.<\/p>\n\n\n\n Using the example of a household spending around R5,000 a month on groceries, the annual spending of R60,000 would generate roughly R9,000 in VAT payments. <\/p>\n\n\n\n Additionally, if you\u2019re spending R2,000 a month on fuel, you indirectly pay roughly R7,500 a year in fuel levies.<\/p>\n\n\n\n At the end of it, a person earning R83,333 a month is left with R36,727.69, which translates to an effective tax rate of 56%. Excluding PAYE, this works out to an extra \u2018tax\u2019 of R21,947 a month.<\/p>\n\n\n\n This is before we consider investment taxes, transfer duties and estate tax, which helps explain why many South Africans feel significantly poorer than their payslips suggest.<\/p>\n\n\n\nItem<\/th> Amount (per month)<\/th><\/tr><\/thead> Gross salary<\/strong><\/td> R83,333.00<\/strong><\/td><\/tr> PAYE<\/td> R24,024.42<\/mark><\/td><\/tr> UIF<\/td> R177.12<\/mark><\/td><\/tr> SDL<\/td> R833.33<\/mark><\/td><\/tr> Total after payroll taxes<\/strong><\/td> R58,298.46<\/strong><\/td><\/tr> VAT (R5,000 groceries)<\/td> R750.00<\/mark><\/td><\/tr> Fuel taxes (R2,000 petrol)<\/td> R625.00<\/mark><\/td><\/tr> School Fees<\/td> R10,800.00<\/mark><\/td><\/tr> Medical aid<\/td> R6,198.00<\/mark><\/td><\/tr> Medical aid tax credits<\/td> -R376.00<\/mark><\/td><\/tr> Property rates<\/td> R2,197.50<\/mark><\/td><\/tr> Refuse removal<\/td> R388.74<\/mark><\/td><\/tr> Sanitation<\/td> R251.66<\/mark><\/td><\/tr> Electricity tariffs (VAT on R1,000 prepaid)<\/td> R260.87<\/mark><\/td><\/tr> Private security response<\/td> R475<\/mark><\/td><\/tr> Total remaining (effective tax)<\/strong><\/td> R36,727.69<\/strong> (56%)<\/strong><\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n\n\n\n There’s more<\/h2>\n\n\n\n