Finance Minister Enoch Godongwana has ruled out calls for personal income tax cuts
Image: GCIS
Finance Minister Enoch Godongwana has ruled out calls for personal income tax cuts and the expansion of VAT zero-rating on additional essential goods, saying South Africa’s current fiscal position does not allow for major tax reductions.
Godongwana said this in a parliamentary reply to questions posed by uMkhonto weSizwe MP Sithembile Nkosi, who had asked whether the National Treasury would consider lowering personal income tax or broadening VAT zero-rating to ease financial pressure on working-class households.
"Budget 2026 aimed to limit the tax burden on individuals and households, within the limitations of the fiscal framework. In this regard, personal income tax (PIT) brackets, tax rebates, as well as several tax thresholds and limits, were adjusted for inflation in order to reduce taxpayers' tax liabilities," Godongwana said.
"South Africa’s personal income tax system remains highly progressive, with 13 per cent of PIT taxpayers contributing 60 per cent of total PIT tax revenue. The tax-free threshold after the inflationary adjustment is R 99 000, meaning that individuals having a taxable income below that effectively don’t pay any personal income tax. Lowering the actual PIT tax rates would be costly to the fiscus, and a balance needs to be maintained between expenditure needs and tax revenue".
He added that VAT collections have remained relatively strong due to steady household spending, but warned that expanding zero-rating on more goods would weaken the tax base.
Godongwana said such relief measures often benefit higher-income households more than intended, since they account for a larger share of overall consumption.
"It is noted in the Budget that individuals in the top four income deciles account for over 75 per cent of VAT revenue, underscoring that broad VAT relief is often captured disproportionately by higher‑income groups," he added.
"Given current fiscal conditions, the proposals have prioritised inflationary PIT relief and the withdrawal of previously planned tax increases over structural tax reductions or VAT base changes. This approach balances household support with the need to maintain fiscal sustainability and protect the tax base".
mthobisi.nozulela@iol.co.za
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