As South Africa’s tax season kicks off, attention is turning to how well the country’s progressive personal income tax system addresses inequality. While higher earners face rates up to 45%, deductions and credits—often used by wealthier taxpayers—significantly reduce its ability to fairly distribute income. Recent reforms, such as pension deduction tweaks and new top tax brackets, haven’t closed income gaps as intended, partly due to tax avoidance strategies and bracket creep. Lower- and middle-income earners are increasingly burdened, while top earners benefit from generous tax breaks. Experts suggest phasing out regressive deductions, shifting to flat tax credits, and indexing tax brackets to inflation as ways to strengthen fairness and make the system more effective in reducing inequality.
The Conversation
