Heading Tax to GDP ratio

The tax-to-GDP ratio gauge a nation's tax revenue relative to the size of its economy as measured by gross domestic product (GDP). The higher the percentage, the higher the amount of tax collected relative to the size of the economy.

South Africa has a relatively high tax-to-GDP ratio compared to other developing countries. New Organisation for Economic Co-operation and Development (OECD) data in the annual Revenue Statistics 2021 publication show that, on average, tax revenues as a percentage of GDP were 33.5% in 2020. According to the International Monetary Fund research, countries should have a tax-to-GDP ratio of at least 15% to experience accelerated economic growth.

A tax-to-GDP ratio of 24.7% was achieved in 2021/22, higher than the 22.5 per cent in the 2021 Budget Review. The ratio was 26,3 per cent of GDP before the pandemic. The tax-to-GDP ratio alone does not indicate good governance, the efficiency of the taxation system in the country, nor how taxes are used or distributed.

Debt levels

Gross loan debt is projected to stabilise at 75.1 per cent of GDP in 2024/25, lower than the projected 72.1 per cent in the MTBPS. Debt-service costs are expected to average R333.4 billion a year.

The consolidated budget deficit is expected to be 5.7 per cent of GDP in 2022/23, progressively lowering to 4.2 per cent in 2024/25.