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03 Apr 2018 16:20
Nene said the slower recovery of consumer confidence had resulted in lower domestic value-added tax collection, “as more people reduced spending and debt"
Finance Minister Nhlanhla Nene said on Tuesday President Cyril Ramaphosa is dealing with the suspension of former SARS commissioner Tom Moyane, who left the agency last month under a cloud.
“The issue of Moyane is being dealt with by the president ... I hope it would be finalised expeditiously,” said Nene during the announcement of tax agency’s preliminary revenue collection results.
The South African Revenue Service collected R1.216-trillion in tax income revenue for the 2017/2018 financial year, R0.7-billion less than the forecast announced in the February budget.
Nene said the slower recovery of consumer confidence had resulted in lower domestic value-added tax collection, “as more people reduced spending and debt”.
“As a result, domestic VAT grew at a muted level of 4.5%, well below the 8.1% growth seen in the previous year,” he said.
“More concerning, though, is the increasing tendency of business to withhold taxes such as VAT and PAYE, collected on behalf of SARS,” said Nene.
Personal income tax accounted for the largest contribution of revenue collection at R462.5-billion, followed by VAT at R297.8-billion, while company tax and customs added R220.2-billion and R49.4-billion respectively.
The preliminary figures are still subject to final audit.
Nene, who was named finance minister in President Cyril Ramaphosa’s maiden Cabinet in late February said the new VAT hike, which came into effect on April 1, is expected to raise an additional R22.9bn in 2018/19.
The VAT increase from 14% to 15% was the first since 1994.
Nene stressed the role of SARS in the economy, saying 90% of the budget is financed through revenue collected by the agency.
“This massive contribution forms the basis of our fiscal framework and is critical in consolidating our sovereign debt,” he said.
“SARS has seen a deterioration in compliance as indicated by the overall growth in outstanding returns across all taxes,” according to a statement.
The tax agency said it has boosted its outstanding returns campaign to address the challenge, with over 1 million calls made by SARS agents to collect outstanding fees.
The organisation has suffered reputational damage in the past years amid a purging of high-ranking officials, with allegations of political interference in its operations.
In March, President Cyril Ramaphosa suspended SARS boss Tom Moyane, saying he had lost confidence in his ability to lead the agency.
Acting commissioner Mark Kingon, who assumed the position after Moyane’s suspension, said the agency has “gone through some pain in the past, but remains a solid organisation”.
“Our focus going forward is to restore credibility and, in particular, our relationship with the taxpayer,” said Kingon.
He said beefing up the capacity of SARS would require a skilled workforce, noting that the institution is losing employees with critical skills to the private sector.
— Fin 24
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