By Ntando Thukwana.
South Africa’s tax collection exceeded estimates, boosted by a strong performance in personal income and corporate levies, especially from the finance sector, preliminary data shows.
The South African Revenue Service collected R1.855 trillion ($101 billion) in the fiscal year through March, Commissioner Edward Kieswetter told reporters in Pretoria, the capital, on Tuesday. That was almost 9 billion rand more than the National Treasury’s revised estimate of R1.846 trillion in its March 12 budget.
Personal income tax grew by R81.8 billion, or almost 13%, compared to a year earlier. That was partly due to above-inflation growth in pay-as-you-earn income in the finance and community sectors, and gains from the introduction of a so-called two-pot pension system that allows savers early access to part of their retirement funds without penalties, Kieswetter said.
Some R12.9 billion was withdrawn from funds under the new system in the first quarter, compared to a projected estimate of R5 billion, the agency said in a statement.
Corporate income tax rose by R6.5 billion, or 2.1%, from a year earlier, mainly due to the finance sector, which was buoyed by improved profits, Kieswetter said.
The finance sector makes up almost a quarter of GDP. It was among the three of 10 industries that contributed to growth last year, expanding 3.5%.
The higher-than-anticipated figure bodes well for the nation’s debt metrics and may mean the budget deficit as a percentage of gross domestic product for the past fiscal year will be narrower than the 4.7% projected by the Treasury last month.
The revenue authority was allocated an additional R7.5 billion rand over the next three years in Finance Minister Enoch Godongwana’s budget last month.
It said it plans to use the money to modernize its systems, reduce its debt cash collection and pursue the more than 5 million outstanding returns. It also intends strengthening its efforts to deal with the illicit economy, trade-based money laundering, mispricing and illicit financial flows stemming from illegal or undeclared trade in cigarettes, second-hand gold and crypto currency.