2022 National Budget Speech Commentary: Mazars
18 Jul, 2022

Below please find a comprehensive summary of key outcomes and spokesperson quotes regarding various areas of today’s National Budget Speech from tax experts at Mazars in South Africa.

Mike Teuchert, National Head of Taxation Services – Budget highlights/summary insights:

The Minister’s maiden Budget Speech was predictable – containing no shocks or surprises which was underpinned by the sense that the state is employing every measure that it can to “keep the ship steady on choppy waters,” and stabilise the economy amidst a turbulent socioeconomic environment.
Overall, the Minister was in a good position due to buoyancy of tax collections and the fact that tax revenue has far exceeded last year’s forecasts.
Tax “relief” is directed at consumers on the ground, with the announcement of inflationary increases to the tax brackets. Other good news for consumers is the fact that fuel levies will not be increased.
However, we need to substantiate what we mean by “relief” because technically, there is no “relief” in the sense of tax decreases. Instead, what the Minister is framing as “relief” is simply the maintenance of the status quo – a situation in which consumers do not end up better or worse off, but remain the same in the same position due to the effects of inflation.
The fact that the Minister will be using some of the excess tax revenue to decrease debt is encouraging – what is concerning is that the biggest increase in spend is debt-servicing costs.
The reduction of corporate income tax rate to 27% is encouraging, however I am disappointed that it is coupled with amendments to the assessed loss provisions and the limitation of interest deduction relating to debt. It seems to be an artificial measure to reduce the corporate tax rate in line with the OECD average of 23%. Mazars would have liked to have seen the rate come down on its own and not on an income neutral basis with adjustments. This would bring about a more substantial reduction that would make a meaningful difference.

Tertius Troost, Manager – Tax Consulting – Budget highlights/summary insights:

This budget provides concrete evidence that SA is at the top of the Laffer curve (“increasing the top tax rate from 41 to 45 per cent for taxable incomes above R1.5 million in 2017/18 appears to have generated significantly less than the projected R4.4 billion per year”). It shows that rate increases lead to emigrations of high-net-worth individuals which have a negative effect on state coffers. It is encouraging to see that National Treasury is keeping a close eye on this.
It is a budget that has a good balance between assisting the economy (i.e. corporate tax rate decrease) and assisting the average person (i.e. by not adjusting the fuel and RAF levy).
Even though it is positive that the tax windfall (i.e. tax revenue collected was more than previously estimated) will be used to reduce South Africa’s debt, it is worrying to see that South Africa’s cost of debt is still the highest growing expense line item in our budget at 10.7%, which is well above South Africa’s expected growth. For this reason, it is clear that National Treasury’s only solution is to reduce wasteful expenditure and cut costs in order to further reduce South Africa’s debt.
In the Budget Review document, it states that all provisional taxpayers with assets above R50 million be required to declare specified assets and liabilities at market values in their 2023 tax returns, which raises the question: Is this the start of gathering information for a wealth tax?

Althea Soobyah, Director – Tax Consulting – Double Taxation Agreements:

“Revision of DTAs will take place to ensure SA taxing rights are retained in retirement funds when breaking tax residence.”

Bernard Sacks, Partner – Tax Consulting – Comprehensive commentary:


There would appear to be a growing recognition that the key to sustainable improved tax collections lies not in the increase in tax rates, but in the broadening of the tax base – brought about by the stimulation of growth in the economy:

…as tax increases multiply, they dampen economic growth, reduce investment, slow employment growth and negatively affect revenue‐raising from other tax instruments by narrowing the tax base. Taxes inevitably distort economic activity as taxpayers change their behaviour.

In the absence of higher economic growth that supports long‐term improvements in revenue collection, any proposals to fund permanent additions to public expenditure require careful scrutiny.

It is hoped that this translates into a shift in tax policy and a renewed focus on growing the economy.


The debt to GDP ratio remains worryingly high.

There is renewed resolve to manage the debt-to- GDP ratio which, worryingly, remains on an upward trajectory. It is expected to peak at 75.1 per cent in 2024/25.

The high debt levels translate into high debt service costs. Placing these costs (of R301.8 billion) in perspective, they exceed the amount spent on economic development (R 227.1 billion), peace and security (R 220.7 billion), health (R 259.0 billion), basic education (R 282.8 billion) and community development (R 236.3 billion). On average, 20 cents of every rand collected in revenue goes to pay debt‐service costs. This is clearly not a sustainable path.


Permanent social grants have been increased in line with inflation. As announced by the President during his State of the Nation address, the social relief of distress grant was extended by 12 months. The Minister announced that a staggering 46 per cent of South Africans receive one form of social grant or another.

More than 50 per cent of personal taxes are paid by approximately one per cent of the population. The sustainability of such a ratio is doubtful.


The National Treasury is working on a sustainable solution to deal with Eskom’s debt in a manner that is equitable and fair to all stakeholders. Any solution will be contingent on continued progress to reform South Africa’s electricity sector and Eskom’s own progress on its turnaround plan and its restructuring. Government expects Eskom to take further steps towards cost containment, conclude the sale of assets and implementation of operational improvements to enhance the reliability of electricity supply. The outcome of this work, which is legally and technically complex, will be announced within the next financial year.



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