Despite the slowdown in the economic recovery in the third quarter of 2021, tax collections since the publication of the 2021 Medium Term Budget Policy Statement (MTBPS) have strengthened. Tax revenue for 2021/22 is expected to reach R1.55 trillion, surpassing pre-pandemic forecasts. This substantial improvement is projected to result in the tax‐to‐GDP ratio reaching 24.7 per cent in 2021/22. Understood in the context of South Africa’s rebased GDP, this exceeds previous highs reached in 2007/08 and 2019/20. Revenue estimates have also been revised higher in 2022/23 and 2023/24.
The characteristics of the economic recovery from the pandemic have been markedly different to previous negative shocks. After the global financial crisis, it was several years before major tax category collections recovered to pre‐crisis levels as a proportion of income and consumption. Tax resiliency in this recovery has been far stronger, potentially due to the artificial nature of the downturn through lockdowns and enforced restrictions on activity, rather than damage inflicted by a recession.
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