The latest tax statistics show revenue collection remains buoyed by personal income tax contributions, while growth in corporate income tax and value added tax (VAT) have plateaued over the past five years.
The South African Revenue Service (Sars) collected R1.114-trillion in taxes in the 2016/2017 financial year. The greatest contribution came from personal income tax which grew by R36.6-billion at 9.4%. Corporate income tax grew by 7.1% and VAT recorded a rise of 2.9%.
At Sars’ latest annual tax statistics presentation which took place in Pretoria on Tuesday, head of research Randall Carolissen said despite tax policy reforms which were meant to increase revenue collection, the expected gains didn’t materialise due to a weak economy.
For example, increasing the personal income tax rate did not yield the revenues Sars anticipated. “Unemployment actually went up and we saw job losses in the managerial rank and the top bracket didn’t produce as much as we thought it would” he said.
Added to that, Carolissen said that the revenue service has seen slippage in tax compliance with a growing increase in the number of people not submitting their return.
Of the 20-million formally registered taxpayers, 6.4-million were expected to file for tax. Thus far, 4.8-million have been assessed by Sars.
Corporate income tax contributed 18.1% to the tax revenue, over half of this (56%) came from just 340 large companies.
SARS said over 3.3-million companies were registered for tax. Of that number, more than 900 000 were expected to submit their returns. So far 714 000 were assessed, 129 000 of those were small companies.
The second largest contributor to total revenue was VAT, which accounted for 25.3%.
Tax collection as a percentage of GDP however stagnated at 26% – the same as last year.
The effect of tough economic conditions affected growth in import taxes with import VAT and customs duties declining by 1% and 1.5% respectively. Import taxes, which have an aggregate contribution of 17% to the total tax revenue, dropped from an average of 18.5% in the preceding five years.
Carilisson said that the cost of revenue collections decreased further from 0.96% in 2015/2016 to 0.93%, well under the international benchmark of 1%.
“That means the cost for every rand we collected only cost the country 1-cent,” he said.