By Lehlohonolo Lehana.
South Africa’s preliminary tax collection exceeded its budget estimate for a second consecutive year, buoyed by windfall mining-company profits and the easing of coronavirus lockdown measures.
The South African Revenue Service collected R1.56 trillion in the fiscal year through March 31 2022, Commissioner Edward Kieswetter told reporters Friday in Pretoria, the capital. That’s R16.7 billion more than projected in the February budget and represents a 25% increase from the prior fiscal year.
The better-than-expected outcome means the budget deficit as a percentage of gross domestic product for the past fiscal year could be less than the National Treasury’s February projection of 5.7%.
Table 1: Revenue collection 2021/22 against Revised Budget 2022 Estimate:
The data is the latest sign that headway is being made in rebuilding a revenue agency that was rendered ineffectual during former President Jacob Zuma’s scandal-marred rule, with a number of inappropriate appointments made to senior posts, some officials forced to quit and key units disbanded.
Corporate income taxes accounted for almost 21% of the total tax take. That’s as high prices and robust demand for commodities boosted mining-company profits in South Africa, the world’s biggest platinum and palladium producer. Personal income and value-added taxes, the two biggest revenue line items, accounted for 36% and 25% respectively.
Table 2: Revenue collection 2019/20 to 2021/22 and variance in Rand million and Percentage:
While the Treasury in February projected that tax revenue for the fiscal year that started on Friday is expected to reach almost R1.6 trillion, the ongoing commodity boom that’s being stoked by Russia’s invasion of Ukraine could see the target revised higher.
The forecast accounts for a one percentage point cut in the corporate tax rate that comes into effect this month, but it doesn’t take into consideration the government’s decision to cut general fuel levy by almost 40% for two months to mitigate against the impact of rising crude prices — a concession that will result in foregone tax revenue of R6 billion.
President Cyril Ramaphosa’s efforts to rebuild the tax agency started with Kieswetter’s appointment in May 2019. It has since sought to enforce tax compliance and set up units to handle the tax affairs of large businesses and high-net worth individuals.
SARS thanks all South Africans and corporate citizens for your support so that our country will realise its full potential and be the country that we as stewards can all proudly bestow to future generations – a country that works for all its people.
Meanwhile SARS says it is actively hiring as it looks to target highly-skilled workers to help build a data-driven ‘smart tax authority’.
“Our mandate is to ensure optimal compliance with tax and customs legislation. We do this through fostering a culture of Voluntary Compliance and by making it easy for taxpayers and traders to comply with their legal obligations.
“In an era characterised by rapidly evolving technological innovation, SARS is preparing for a world where increasingly our work is informed by data-driven insights, machine learning, algorithms, artificial intelligence, and interconnectivity of people and devices.”
The revenue collector’s latest job listing can be found here.