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Tax & Spend

OECD Urges South Africa to Raise Taxes, Sell State Firms

  • Tax reform seen playing bigger role in reducing inequality
  • High state wage bill, state companies seen as risk to fiscus
The skyline of Johannesburg. 

The skyline of Johannesburg. 

Photographer: Guillem Sartorio/Bloomberg
Updated on

South Africa should overhaul its tax regime to fund reforms that enhance economic growth and reduce inequality now that it’s reached the limits of spending adjustments that were aimed at cutting fiscal deficits and reining in debt, the OECD recommended. 

Africa’s most-industrialized economy is battling surging debt, which the government expects to peak at 75.1% of gross domestic product in the 2023 fiscal year, and its interest bill has been the fastest-growing expenditure line item in the budget since 2011. Both are key risks to fiscal sustainability and have been compounded by damage wrought by the coronavirus pandemic, years of overspending, mismanagement and graft.