South Africa’s government faces major tax dilemmas

Significance

Wealth, inheritance and ‘solidarity’ taxes are being considered -- with the latter recently flagged as one solution to pay for COVID-19 vaccine procurement and pandemic-related relief -- as well as strategies to broaden the tax base.

Impacts

• A politically contentious wealth tax could prove a bellwether for whether technocratic or politically expedient measures are prioritised.
• Compromise on proposed public-sector wage cuts by government would raise taxpayer resentment and potentially hinder compliance.
• The ruling ANC will be reluctant to countenance the largest of planned yearly tax increases ahead of the 2024 general elections.