The South African Revenue Service (Sars) has welcomed the revised revenue collection estimate announced Tuesday by Finance Minister Enoch Godongwana.
In this year’s budget, Godongwana increased its estimated revenue to R1 547.07 billion from its February 2021 budget estimate of R1 365.1 billion.
The 2021/22 yield is expected to result in a tax-to-GDP ratio of 24.7%, higher than the pre-Covid level, indicating that the extraction rate is on a positive trajectory.
On January 31, 2022, Sars collected more than R 1.2 billion, generating a growth of R 275.1 billion (28.2%) and a growth of R 169.6 billion (15.7%) compared to the collections from 2019/20.
Most collections at printed estimates show an upward trend, with growth primarily driven by:
- Net corporate income tax (R91.4 billion, 55.8%)
- Net personal income tax (R30.5 billion, 7.4%)
- Net Value Added Tax (R15 billion, 5.0%)
“We remain cautiously optimistic that we will meet the new revenue estimate,” said Sars Commissioner Edward Kieswetter.
Since its inception, Sars has raised more than R16 trillion for the country’s social and economic development.
“These revenues have enabled the government to improve the lives of millions of South Africans through health care, education, social grants and other basic services,” Kieswetter said.
Commodity prices have been thriving in recent months; therefore, key Sars segments and regions have benefited from increased global demand for commodities.
The additional revenue earned by commodity-producing and exporting companies, along with Sars’ deliberate and focused tax compliance, has resulted in a better-than-expected increase in tax revenues.
The tax collector said the compliance business had delivered positive results, with a notable 18% year-over-year increase.
This includes targeted and considered work audits of major companies that have generated additional revenue of more than R4 billion.
The Illegal Economic Unit has seen completed investigations and carried out several searches and seizures, yielding nearly R6 billion.
Excise collections are recovering from the trade restrictions imposed as a result of the Covid-19 ban on sales, especially on alcohol, with businesses now paying excise taxes that have been postponed during the pandemic.
Continued restrictions on electricity supply and high inflation – with a serious impact on consumer demand and disposable income – present challenges to revenue collection.
compiled by Narissa Subramoney