Minister of Finance Enoch Godongwana said this week that personal income tax collections were marginally better than expected due to near‐term gains.
In his Medium Term Budget Policy Statement (MTBPS), Godongwana said personal income tax was expected to surpass the budget forecast of R640.3bn by R6.4bn due to the recovery in earnings and higher bonus payments, with employee tax from the finance sector a strong driver of year-to-date growth.
According to the National Treasury, a sustained recovery in earnings and higher bonus payments had benefited personal income tax collections, with employees’ tax from the finance sector driving the strong year‐to‐date growth.
“Sars will continue its focus on enforcing compliance in areas such as debt collection, fraud prevention, curbing illicit trade, voluntary disclosures and encouraging honest taxpayers to comply voluntarily.
“Every additional rand of revenue collected is one rand less, which we have to borrow,” he said.
In its response to the MTBPS, Sars said it had continued apace with its core functions of collecting all that was due to the fiscus.
“Gross revenue collections remained encouraging during the first half of the current fiscal year despite an uneven economic recovery. Sars is proud to report gross collections totalling R1 016.4 billion, growing by 4.5% and recording a surplus of R1.0 billion against the Budget 2023 estimate.
“This performance is on the back of strong gross collections worth R14.7 billion from VAT, R7.0 billion from the fuel levy, and R4.9 billion from individual taxes – partially offset by R17.7 billion lower gross collections from CIT (Corporate Income Tax). This is as company profits remain under pressure. Further, smaller shortfalls were recorded for Dividend Tax (R2.6 billion), Specific Excise (R2.5 billion), and Import Duties (R0.4 billion).”
Sars said it achieved R11.9bn from revised assessments flowing from the verification of 1.12 million returns, up year per year by R5bn (70%).
“Almost R40 billion that was secured from resolving more than 440k debt collection cases, up R4 billion (±12%). R2.3 billion secured from 121 illicit investigations and 181 state capture cases in progress, 27 cases handed to the NPA (National Prosecuting Authority),“ it said.
Income and profits in the broader economy had been adversely affected from what was anticipated in the 2023 February Budget, it said.
Sars said provisional corporate income tax collections, especially the mining sector, had reduced at the end of June 2023 and led to a larger than expected deficit against the 2023 Budget estimate. Nevertheless, higher-than-estimated profitability in the finance sector, among others, supported provisional corporate income tax and dividends tax collections.
“Main sector performance that showed growth includes – Finance 7.8% from employment and vesting of shares, Community 6.8% from annual salary increases (mainly Government), and Wholesale 6.2% - mainly from retail and vehicles.
“Despite encouraging gross revenue collections, tax revenue performance to date is impacted adversely by several challenges, both domestic and global developments,” it said.
Sars said the intermittent and inadequate electricity supply remained the most immediate and significant constraint to production, investment and employment.
“Rising inflation rates constrained household spending by raising the cost of living. Global growth slowed further in recent months. Central banks globally are countering the effects of high inflation by implementing restrictive monetary policies for longer than anticipated which negatively impact all developing countries.
“Several global risks remain, including the increase in geo-political tensions, resulting in the need for stronger domestic demand to support economic growth.”
Sars said it was committed to addressing and limiting the impact of key risks on the administration of tax and customs revenue collections, such as load shedding and internal resource constraints.
“SARS endeavours to continue to expand the tax base and ensure compliance by taxpayers, with the view to collect all tax revenue due,” it said.
PERSONAL FINANCE