Taxpayers pay up while nothing is done to curb corruption and waste – Outa

Taxpayers in South Africa are paying for the budget shortfall through bracket creep while nothing is done to curb corruption and wastage in the government, civil action organisation Outa says, slamming Treasury’s stealth tax hikes.

Tax bracket creep is costing South Africans tens of thousands of rand, while government fails to cut waste and recover lost revenue, the Organisation Undoing Tax Abuse (Outa) says after submitting its response to parliament on Budget 2025.03.24

Wayne Duvenage, CEO of Outa, says the organisation strongly rejects National Treasury’s proposals to increase VAT and once again, freeze personal income tax brackets. “These proposals unfairly punish South Africa’s already overstretched tax base while government continues to ignore the urgent need to address corruption, waste and inefficiency.”

Outa’s submission highlights the silent yet devastating impact of tax bracket creep. Since 2012, Treasury adjusted personal income tax brackets below the official inflation rate in 11 out of 14 years. As a result, South Africans have endured a cumulative 26 percentage point disadvantage due to inflation.

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Taxpayers have been paying millions through bracket creep

“For a middle-income earner on around R350 000 per year, the failure to adjust brackets in line with inflation has cost them over R85 000 in extra taxes since 2012. This is a stealth tax that Treasury imposed by not adjusting tax-bracket increases to keep pace with inflation, thereby hitting the pockets of ordinary citizens while service delivery declines,” Duvenage says,

Treasury proposed no adjustment to tax brackets for the second year in a row in Budget 2025, adding yet another layer of financial strain to overstretched taxpaying individuals.

In addition to bracket creep, Treasury plans to increase VAT by 0.5% on 1 May and another 0.5% next year, increasing the VAT rate to 16%. Outa argues this will deepen inequality, placing a disproportionate burden on low- and middle-income households, while negatively affecting on employment and business investment in South Africa.

“South Africans are being punished for government’s failure to address inefficiency and corruption. We are overtaxed and under-serviced. Taxpayers have had enough of this abuse.”

Duvenage says Outa is calling on the Standing Committee on Finance and the Select Committee on Finance to reject Treasury’s proposals and demand a fundamental shift in government’s approach to fiscal policy.

“Outa’s submission is not just a rejection of Treasury’s proposals. It provides practical, actionable solutions that can address the fiscal crisis.”

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Outa’s submission calls for tax cuts for taxpayers

The submission includes this advice:

• According to the South African Revenue Service (Sars) commissioner Edward Kieswetter, there are at least 100 000 individuals earning over R1 million per year who are not registered for tax. Bringing them into the tax net could generate an additional R100 billion in revenue. Illicit trade, particularly in tobacco and alcohol, costs the country an estimated R30 billion annually in lost revenue.
• Treasury’s own GTAC spending reviews identified R36 billion in potential savings over three years by cutting programmes that deliver below-average social value. Reports from the Auditor-General and independent bodies estimate R200 billion is lost annually to corruption, inefficiency and wasteful expenditure.
• A call for a downsized cabinet. South Africa has 75 ministers and deputy ministers, one of the largest executive bodies in the world. Rationalising this structure could save hundreds of millions annually.
• VIP protection services cost R3.9 billion a year and Outa believes a focus on rationalising and reducing costs in this area could produce a significant reduction in these costs that could save nearly R1 billion annually, with funds redirected to key public services like the NPA, Hawks and Special Investigating Unit.

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Taxpayers paying for too many SOEs and state entities

• The number of public entities has ballooned from 100 to 279 between 1999 and 2019. Outa urges Treasury to evaluate and sell non-core SOEs, potentially generating significant tax revenue and reducing government liabilities.
• During 2024 Outa identified R55.5 billion in accumulated surpluses across 26 entities in the department of higher education alone. Outa believes entities under other departments have similarly accumulated surplus funds. Legislative amendments could empower Treasury to reduce the amount of SDL levies to specific SETAs and reallocate funds to other areas or reduce our national debt.
• Despite the downturn in commercial property rental rates post-Covid-19, many government departments continue to pay inflated lease rates. Outa calls for a comprehensive review of all state leases and better utilisation of state-owned properties.
• Outa also calls for a review of the number of people occupying board positions in state entities, as well as the fees and number of meetings held by numerous boards that failed to exercise meaningful oversight on the mismanagement and financial affairs of these organisations, such as ATNS, ACSA, Sanral and many of the SETA’s and NSFAS.

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Outa calls on Treasury not to increase VAT

In addition, Outa calls on the Standing Committee on Finance and the Select Committee on Finance to reject the unjust VAT and personal income tax proposals and demand accountability from Treasury.

“South Africans cannot be expected to shoulder more taxes while billions are wasted, lost or stolen. Parliament’s finance committees have a duty to hold Treasury accountable and demand a responsible, efficient government that serves its people.

“We refuse to support a budget that seeks to balance the books on the backs of citizens while government continues to lose billions to corruption and inefficiency. South Africans are overtaxed and under-serviced. It is time for Treasury to clean up its own house before asking taxpayers for another cent,” Duvenage says.