South Africa expects to collect more tax this year than first planned. Finance Minister Enoch Godongwana announced on Wednesday, 21 October 2026, that the gross tax revenue forecast for 2026/27 has been revised upwards by R17,1 billion compared with February’s Budget estimate.
He said the improvement comes from stronger-than-expected collections of corporate income tax, dividends tax and Value-Added Tax (VAT). Godongwana made the announcement in Parliament while delivering the Medium-Term Budget Policy Statement (MTBPS), also known as the mini-budget.
What’s Driving The Higher Tax Collections?
The three main contributors are:
- Corporate income tax: company profits, especially in mining, have been stronger than expected.
- Dividends tax: higher company profits mean higher dividend payouts to shareholders, and more tax on those payouts.
- VAT: collections from the tax on goods and services have also come in above forecast.
Much of the windfall comes from high global commodity prices, which have lifted mining profits. Godongwana warned that this boost may not last.
“A large portion of this improvement is due to higher commodity prices, and these gains are expected to dissipate over the medium term,” he told Parliament.
Tax Revenue Outlook To 2029/30
Even with that caution, Treasury expects tax collections to keep growing over the next few years.
“Overall, gross tax revenue is projected to increase from R2.14 trillion this year to R2.53 trillion in 2029/30,” the minister said.
| Year | Projected gross tax revenue |
|---|---|
| 2026/27 | R2,14 trillion |
| 2029/30 | R2,53 trillion |
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Why Treasury Is Being Cautious
Before the mini-budget, some economists expected a much bigger tax windfall. PSG’s Johann Els suggested it could reach R50 billion or more, and Bank of America estimated up to R70 billion. Treasury’s more modest upward revision of R17,1 billion in gross tax revenue reflects its view that commodity-driven gains are temporary. That’s why it hasn’t built the full boost into its long-term plans.
The economy is also under pressure. Treasury cut its 2026 growth forecast to 1,2%, down from 1,6% in February, after the Middle East conflict pushed up fuel prices and the economy shrank in the second quarter.
Where The Extra Money Is Going
The improved revenue picture gives government some room to respond to pressures this year. Among the measures announced in the mini-budget:
- Fuel levy relief: a cut of R1,50 a litre on petrol and R3 a litre on diesel from 4 November to 1 December 2026, at a cost of about R10 billion in lost revenue
- El Niño and other risks: R10 billion for the contingency reserve
- Infrastructure: R20 billion earmarked for projects under evaluation by the Budget Facility for Infrastructure
- SARS: a R6,9 billion Special Appropriation Bill, mainly for the South African Revenue Service.
Godongwana said higher revenue means government can increase spending by R45,5 billion in 2026/27 compared with February’s plans. Government also identified R38,1 billion in savings over the medium term.
SARS Targets The Illicit Economy
Godongwana said SARS continues to strengthen revenue administration and improve tax compliance, which has helped collections. He added that SARS plays a key role in government’s fight against the illicit economy, especially illegal alcohol and tobacco trading.
“Through customs and excise modernisation, which includes enhanced cargo scanning, track-and-trace capabilities, and stronger frontline enforcement, SARS is disrupting the networks that enable illicit trade,” he said.
Illicit cigarettes and alcohol cost the fiscus billions in lost excise and VAT revenue each year. They also undercut legal businesses and the jobs they support.
“We will provide a more detailed update on the National Illicit Economy Disruption Programme in the Budget next year,” the minister said.
Frequently Asked Questions
How Much Has The Tax Revenue Forecast Increased?
The gross tax revenue forecast for 2026/27 has been revised upwards by R17,1 billion compared with the February 2026 Budget estimate.
Why Is South Africa Collecting More Tax Than Expected?
Collections of corporate income tax, dividends tax and VAT have been stronger than expected, largely because higher commodity prices have boosted company profits.
Will The Higher Tax Collections Last?
Godongwana warned that much of the improvement comes from commodity prices, and that these gains are expected to “dissipate over the medium term”.
How Much Tax Will South Africa Collect By 2029/30?
Gross tax revenue is projected to grow from R2,14 trillion in 2026/27 to R2,53 trillion in 2029/30.
What Is SARS Doing About The Illicit Economy?
SARS is modernising customs and excise, with better cargo scanning, track-and-trace systems and stronger enforcement, to disrupt illegal alcohol and tobacco trading. A detailed update on the National Illicit Economy Disruption Programme will be given in the 2027 Budget.
For ordinary taxpayers, higher collections mean less pressure on government to raise taxes in the short term. Major tax decisions will be announced in the February 2027 Budget. The most immediate benefit for Gauteng households is the temporary fuel levy relief from 4 November, which should help commuters and businesses dealing with record fuel prices.
Godongwana’s warning that the commodity boost could fade is also a reminder that South Africa’s public finances still depend heavily on global markets and stronger economic growth.
