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Faced with a growing deficit, depressed revenue generators and a limited tax pool, South Africa’s finance minister, Pravin Gordhan, once again focused the tax increases on high income earners. By his own admission finding the right tax balance for the 2017/18 budget was a challenge. South Africa is currently sitting with a deficit or shortfall of R28 billion – that’s by how much its spending plans outstrip its revenue. The minister has to find ways to plug the gap within the next two years. Increased taxes are the most obvious and reliable source of government revenues. And so taxes had to be increased. But even within the tax space, the tax instruments available to the minister are limited because the country’s tax base is limited. Of the 55 million people in South Africa, about 14 million are registered for tax and only 7.4 million are liable to tax, along with companies and trust. The other half of registered taxpayers fall outside the lowest tax bracket. Thus, from a direct inco...

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