By Lehlohonolo Lehana.
The South African Revenue Service (SARS) is making progress in its tax enforcement measures across South Africa with National Treasury set to give it more money to fund its fight over non-compliance.
Speaking on the side-lines of the budget speech in Parliament, SARS commissioner Edward Kieswetter revealed that R3 billion was recovered to date.
During the national budget speech on Wednesday (23 February), finance minister Enoch Godongwana praised the successes of SARS over the last three years.
Godongwana revised tax revenue collections for 2022/23 to a total of R1.68 trillion. This exceeds last year’s budget estimates by R93.7 billion and the 2022 medium-term budget policy statement estimate of R10.3 billion.
He said, “the improvement in revenue is due to the higher collection in corporate and personal income taxes and in customs duties. This partially offset the lower value-added tax estimates.”
“Our country is reaping the benefits of a more efficient and effective tax administration, that is, building trust to increase voluntary compliance and boost revenue collections,” the minister said.
Kieswetter said that for the first time in 15 years, revenue exceeded non-interest spending. SARS is further focusing its investigations on both taxpayers and syndicates.
He said that there was a proliferation of syndicates working in tax-evasion schemes.
SARS is currently working on 413 cases, half of which were at a far advanced stage of investigation.
Meanwhile Tax Consulting SA said that the government’s reliance on personal income tax is still concerningly high, as it has been for years, with an ever-decreasing tax base. By Kieswetter’s own admission earlier in February, the country lost over 6,000 taxpayers to emigration in 2022.
“Unfortunately, this means that there being no increase in the personal income tax brackets will not decrease the burden on wealthy taxpayers,” said Tax Consulting SA.
“In addition, SARS is anticipated to strengthen oversight measures in respect of these individuals to improve collection.”
The firm said that provisional allocations had been set aside for the improvement of SARS’ revenue-collecting capacity, with a direct allocation for its capital and information and communication technology projects.
Summarily, the new proposals set forth in this year’s budget do not necessarily bode well for the country in the short- to medium-term.
With many of the measures introduced being geared at minimising the strain on taxpayers across different segments of South Africa, perhaps taxpayers are somewhat happy with what they have heard in the budget.
Nonetheless, it seems that the government is still treating the symptoms rather than the disease, the firm said.
In light of the latest budget speech, Godongwana adjusted the applicable personal income tax brackets.
Tax brackets are expected to be fully adjusted by 4.9% – providing some relief to South African taxpayers.
The minister further noted that adjusted in terms of inflation, the tax-free threshold has been pushed from R91,250 to R95,750.