REUBEN COETZER: Stop the ‘granny tax’ — a theft of dignity in plain sight

Nobody goes into retirement expecting to be taxed again after years of building a nest egg meant to act as protection and a safeguard for retirees.

Yet the government’s latest push to tax foreign pensions is an undignified raid on hard-earned pensions dressed as fiscal reform. It is not merely “revenue generation” — it is a line drawn through the dignity of our elders and yet another tax proposal by the government. 

SA’s retirees, whether returning diaspora or foreign nationals who have chosen to invest their final years here in SA, are being told in effect: your savings are our shortfall.

This is not policy. This is plunder masquerading as prudence. 

The pension paradox: from safe haven to soft target

Pensions are not mere windfalls. They are the accumulated fruits of decades of toil, deferred gratification, and careful, considerate financial planning. For many returning South Africans, pensions are the bridge that allows them to reinvest in their homeland by buying homes, starting small ventures and supporting their families. Foreign retirees illustrate confidence that SA is a place worth living in and worth spending money in. 

Now, the Treasury threatens to turn pensions from sanctuaries into soft targets. The logic is as cold as it is cynical: pensioners lack the political clout of unions, the public platform of corporations, or the leverage of big business. They are easy prey. But once this line is crossed, what confidence can any citizen have that their savings will be safe tomorrow? 

Economic self-inflicted wounds

The “granny tax” is not only unjust — it is self-defeating. Retirees do not bury their pensions under mattresses; they inject them directly back into the economy. They buy homes, pay medical professionals, support grandchildren in schools, and keep local businesses afloat, all of which are to the benefit of employment and the local economy. Their consumption sustains jobs, which in turn sustains tax revenue. 

By removing that income, you do not merely dent their dignity —you erode the very tax base the government claims to protect. Retirees with means will relocate. Potential returnees will choose to stay abroad. The property market loses buyers, tourism loses long-term residents, and towns lose patrons. What the Treasury will gain on the one hand, it will lose exponentially on the other. And for what purpose? To put more money in the pockets of the executive branch, who have already proven countless times that they are experts at squandering precious national treasure.  

SA should be wooing the diaspora back, not sending them packing. Every rand spent by a retiree here circulates into local economies, which are especially to the benefit of small and medium enterprises, while every rand spent abroad is a net loss to our country. The granny tax threatens to convert a flow of investment into a trickle and finally an eventual drought. 

The rule of law betrayed

Section 10(1)(gC)(ii) of the Income Tax Act exempts foreign pensions from taxation. That exemption is not a loophole; it is a recognition that retirees should not be double-taxed and that their pensions are distinct from ordinary income. To scrap it is to dismantle predictability and consistency in tax law — which is a cornerstone of both justice and investment. 

To target one vulnerable group of society selectively, without comprehensive public consultation, leads to the taking of ill-informed decisions without any fair process. Worse, it introduces uncertainty: if today’s exemption can be overturned at the whim of a minister, what stops tomorrow’s Parliament from reaching into domestic retirement funds? What was once secure suddenly becomes perpetually precarious. 

This is not fiscal management; it is the slow hollowing-out of trust in the rule of law itself. 

A moral line crossed

Retirement is meant to be a season of rest after decades of contribution. Instead, this proposal paints pensioners as fiscal livestock to be milked at the convenience of a government to whom no amount of taxation and fiscal treasure seems enough.

Yet despite the state coffers being filled to the brim with taxpayers’ money, there is not one tangible substantial improvement that the government can point to to justify another avenue of taxation. Pensions are not luxuries for people; they are lifelines. They pay for healthcare, medication and family support. They enable grandparents to step in where parents cannot—covering school fees, groceries and even rent. 

By taxing pensions, the government is not taxing surplus; it is taxing survival, not just of pensioners but of the next generation that pensioners often are trying to keep afloat. This is a moral inversion: the elderly, who should be sheltered, are being stripped. It recalls the parable of the prodigal steward who, after wasting his master’s wealth, seizes the widow’s mite to make up the difference. A society that robs its elders robs itself of honour and dignity. 

What must be done

There is still, however, a way back to restore dignity and honour for our pensioners. 

First, parliament must immediately withdraw and abandon the granny tax without delay.  Second, retirement income, be it foreign or domestic, must be legally shielded from arbitrary taxation. This requires a statutory guarantee, not a mere ministerial promise.  Third, Treasury must look inward and exercise strict internal fiscal discipline. Treasury must rein in state-owned enterprises, cut non-essential perks, and redirect resources from vanity projects to core services.  Finally, decisions about the survival of pensioners cannot be made behind closed doors. Pensioners must have a seat at the table, and the government must have comprehensive public consultation processes regarding decisions affecting South Africans.  

The test of a civilised society

A state’s greatness is not measured by the weight of its taxes but by the fairness of its tax burdens. To tax pensions cannot be seen as inventive clever economics when it is clearly cowardice dressed as reform. SA stands at a crossroads: protect the savings of its elders or plunder them to paper over political failure and fiscal irresponsibility. 

If we cross this line, we will not only lose investors and retirees—we will lose ourselves. The granny tax must be scrapped, and with it, the illusion that the state can spend recklessly today and raid tomorrow’s pensions to pay for it. 

• Coetzer is spokesperson for Free SA.