A sizeable revenue overrun, fuelled by soaring gold and platinum group metal (PGM) prices, has opened the door to potential tax relief for South African consumers and some reversal of “bracket creep” at the National Budget speech on Wednesday, said PayInc.
The group’s latest report highlights “notable improvements” in South Africa’s fiscal situation over the past year as record commodity prices have boosted corporate tax receipts, while the stronger rand and lower bond yields lower the cost of servicing debt.
With economists now eyeing a sizeable revenue overrun – estimated at R20bn-60bn according to the Bureau of Economic Research – “the pressure to hike taxes could be softened,” reads the report.
In November, the Medium-Term Budget Policy Statement (MTBPS) already signalled a shift in the fiscal outlook, including a narrower budget deficit, a growing primary surplus and a projected peak in gross loan debt at 77.9% of GDP in 2025/26, declining to 77.7% in the coming financial year.
PayInc said it expects Treasury to beat the budget deficit target laid out in its MTBPS, buoying hopes the government will scrap some of the tax measures already reflected in its medium-term estimates.
“Hopefully the R16.5bn pencilled in from bracket creep in FY27 could be among such revisions,” it said.
For the past two years, the government has opted not to adjust tax brackets for inflation, pushing many earners into higher tax categories without accounting for their actual buying power.
With personal income tax responsible for nearly 40% of total tax revenue, Sars has estimated that so-called bracket creep could rake in R15.5bn in additional tax revenue in FY26.
PayInc’s latest salary survey, drawn from 2.1-million people across the country earning R5,000-R100,000 a month, pointed to positive momentum for South African consumers, with nominal wages rising 2.2% year-on-year to an average of R21,506 in January.
While inflation (although moderate) continues to erode salary gains, with average wages down 1.4% in real terms, the data points to an upward trend in net salaries since 2024, driven by a gradual improvement in economic activity, said PayInc.
It added that consumer inflation was expected to remain moderate at 3.5% this year, opening the door to meaningful improvements in buying power.
“Even a moderate salary adjustment might render a real increase in remuneration in 2026, supporting the purchasing power of earners and thus also the broader economy,” it said.
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