ALEX MALAPANE | SA needs macroeconomic policy rebalancing, not more taxes

South Africa cannot tax its way to prosperity. Yet our economic conversation remains dominated by revenue collection,tax complianceand fiscal consolidation. At the same time, insufficient attention is given to the macroeconomic policy mix that ultimately determines whether businesses invest, jobs are created and incomes grow.

The country faces a revenue crisis, but more a growth crisis. It is time to shift the policy debate from tax mobilisation to macroeconomic policy rebalancing. The 2026 National Budget reaffirmed the government’s commitment to fiscal discipline.

It projected a tax-to-GDP ratio of approximately 25.9%, maintained a primary budget surplus, relied on stronger South African Revenue Service (Sars) collections and introduced increases in the general fuel levy, Road Accident Fund levy, carbon fuel levy and excise duties. Fiscal prudence is necessary and should be welcomed. However, fiscal consolidation alone cannot become South Africa’s economic strategy.

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According to the International Monetary Fund, South Africa’s economy is expected to grow only about 1.1% in 2026. According to Stat SA, the officialunemployment ratestood at 32.7% in the first quarter of 2026, while youth unemployment reached 45.8%. Public debt remains close to 78% of GDP, and debt-service costs continue to absorb an increasing share of government revenue.

The fastest way to improve fiscal sustainability is to expand the productive capacity of the economy. This is where macroeconomic policy rebalancing becomes essential These indicators point to an economy that has achieved relative macroeconomic stability but continues to underperform structurally. The uncomfortable reality is that South Africa’s greatest macroeconomic challenge is no longer inflation; it is weak economic growth.

Every additional tax imposed on a stagnant economy ultimately places greater pressure on households and firms already struggling with rising operating costs, weak demand and constrained investment. Government revenue is an outcome of economic expansion, not a substitute for it. This is where macroeconomic policy rebalancing becomes essential.

The priority should be a decisive shift from revenue mobilisation to investment mobilisation. South Africa’s gross fixed capital formation remains about 14%-15% of GDP, well below the level associated with high-growth emerging economies. The government should:

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