Much has been made in the media of tax over-collection over recent months in South Africa, in part driven by higher commodity prices. Today’s post shows that pre-pandemic, commodity tax windfalls did not pick up very much as commodity prices boomed. This was because mining profits were generally low on account of loadshedding and other policy-related constraints that prevented the industry from taking advantage of multi-generation highs in commodity prices. Profits and tax contributions however did rise strongly after the COVID-19 pandemic. The second chart shows overall tax buoyancy, which measures the pick-up in tax revenue from economic growth. Outside of the immediate post-pandemic period spike, revenues have generally disappointed compared to Treasury forecasts (see here and here for historical forecast analysis), even though buoyancy has been higher than expected for 2024/25.
