In a landmark study published in the Journal of Economic Criminology, researchers Janél Viljoen and Hanneke du Preez from the University of Pretoria shed light on the effectiveness—or lack thereof—of South Africa’s tax evasion punishment system.
With 95% of the country’s revenue depending on tax collection, the cost of non-compliance is staggering. The study notes that South Africa faced a budget deficit of R331.4 billion in 2024, largely due to tax evasion.
Despite existing frameworks, including penalties, interest, and criminal charges under the Tax Administration Act, the research finds these measures to be inadequate in deterring tax evasion. For example, monetary penalties imposed on offenders—ranging from R250 to R16,000 monthly based on taxable income—often fail to discourage repeat behaviour, especially among high-income individuals.
The study also highlights the psychological disconnect where many tax evaders do not consider their actions criminal. This lack of personal accountability fuels ongoing evasion despite the legal consequences. Interviews with tax experts revealed that imprisonment, while legally justified, might have unintended social and economic consequences on offenders and their families.
Furthermore, the South African Revenue Service (SARS) and National Prosecuting Authority face resource constraints, limiting their ability to effectively prosecute complex tax crimes. Only 12% of surveyed tax practitioners reported clients facing criminal charges, though 96% acknowledged penalties had been imposed on their clients.
In exploring alternative deterrents, the study surfaces new suggestions: community service, blacklisting, business closure, and public exposure. These, the researchers argue, may carry greater psychological weight for offenders than financial penalties alone. Ultimately, the findings call for a more holistic approach to tax enforcement—one that blends legal, social, and behavioural strategies to address both the intent and impact of evasion.