South Africa's newly appointed tax commissioner warned that the Iran war could undermine the government's ability to meet revenue targets, as rising fuel prices create costly subsidies and threaten to slow economic growth.
“We are concerned” about R2.13-trillion revenue forecast in Budget 2026 Johnstone MakhubuWho became Commissioner of the South African Revenue Service on 1 May.
“We are looking at an April that is not worrisome,” he said during an interview in Bloomberg's Johannesburg office on Wednesday. “But I'd bet my last dollar that the impact is going to be visible in May.”
South Africa's revenue collections have been performing better in recent years following steps taken to correct poor performance, boosting sentiment among investors that the country has got its public finances under control after a decade of rising debt.
But the war that began on February 28 represents a significant test of fiscal discipline.
The National Treasury has extended until June a fuel levy cut relief measure launched in April to provide relief to businesses and households from rising gasoline prices, which have risen by the most in nearly two decades since the conflict began.
The move will cost approximately R17 billion in foregone revenue. While the Treasury has said the intervention for the first month will be offset by combining spending priorities, it is not clear how it will find the money for May and June.
Makhubu said one solution could be to repay the R650 billion owed to taxpayers.
“We can still go back there and try to find some opportunities to help rebalance and offset some of the losses,” he said.
But a bigger concern is what will happen to the economy, which Makhubu said accounts for about 86% of revenue collections.
“If that sneezes, no matter what you do with the other 14%, 15%, it will not be enough to cover the fractures that you see in the economy and the shocks that are in the environment,” he said.
decline in growth
The International Monetary Fund recently reduced its 2026 growth forecast for South Africa from 1.4% to 1%. The Treasury, which uses this estimate to predict revenue collections, had forecast growth of 1.6% before the war began.
The main focus of the new commissioner is to reduce South Africa's tax gap, or the difference between the revenue SARS receives and what everyone would receive if they paid their taxes.
Makhubu said that according to SARS' own modelling, up to R450 billion remains uncollected, and cited illicit trade in alcohol and tobacco as areas ripe for targeting by deploying the technology. He said joint research between SARS and the International Monetary Fund shows that about R250 billion remains uncollected in value added tax alone.
He said SARS is already working with the South African Reserve Bank on a fiscal marker that will mimic the techniques used to stop counterfeit bank notes and will be imposed on all goods subject to excise duty.
Customs is another area where SARS estimates it is undercollecting up to R70 billion because importers deliberately undervalue goods brought into the country.
Increasing surveillance at South Africa's ports of entry would help, Makhubu said, acknowledging the problem requires a comprehensive approach, including strengthening border security and investing in expensive detection equipment.
“If our vision is fragmented, we will not succeed,” he said.