SA has less than 7.5m personal income taxpayers collectively supporting 28 million grant recipients
South Africa has less than 7.5 million personal income taxpayers who collectively support about 28 million grant recipients.
That’s according to recent media reports that juxtapose grant figures contained in the South African Social Security Agency’s (SASSA) latest annual report, against income tax figures from National Treasury’s 2024 Budget Review.
Comparing the two sets of figures provides a sobering reminder of the urgency required to grow the economy should government hope to fulfill its many social development promises.
Of the 7,4 million people who pay tax, less than 200 000 – those who earn more than R1,5million a year or about 2,7% of taxpayers – account for more than 30% of tax revenue.
In other words we have a remarkably thin tax base underpinning an enormous dependency on social grants.
And that dependency is growing, rather than shrinking. SASSA figures presented to parliament earlier this month show that 19 million South Africans receive social grants, while an additional nine million receive social relief distress grants which started during the Covid-19 pandemic.
In other words almost half the South African population receives some form of social grant.
We have an alarming level of dependency, with the lives of millions largely determined by taxpayers who themselves are hostage to the economy.
These latest figures clearly show how to a large extent social grants underpin South African social security. They also demonstrate the vital importance of growing the country’s taxpayer base. Social development already consumes R387 billion of the national budget – the third largest item – and is unsustainable without a concomitant growth in tax revenue.
But as important as growing the number of taxpayers via economic growth is reducing dependency by growing South Africa’s skills base. The greater the skills base, the greater the chance of employment, the less dependency on social grants.
We as the Cape Chamber therefore believe most social grants should require skills training and public work, thereby shifting the culture of handouts. If people have skills they are empowered to seek gainful employment and join the labour force, rather than adding to the ranks of the unemployed and those too demoralised to look for work.
Linking social grants to skills and public work would address the twin epidemic of unemployment and the national skills deficit, while bolstering GDP and making citizens employable.
John Lawson
CEO of the Cape Chamber of Commerce and Industry