Sars just misses its tax target

• New renewable energy sector starting to contribute

Load-shedding may have cost the government as much as R60bn in lost revenue in the latest tax year — but the taxman is also seeing the emergence of a new renewable energy sector that is starting to contribute to the public purse.

Sars commissioner Edward Kieswetter gave an update on the effect of SA’s energy sector on the tax take as he reported that the final revenue outcome for the tax year that ended at midnight on March 31 fell a fraction short of February’s revised budget estimate.

Sars collected more than R2trillion for the first time, but record refund payouts reduced the outcome to a net R1.68-trillion, which was R5bn shy of finance minister Enoch Godongwana’s February estimate, but still R88bn higher than the finance minister in 2022.

The revenue outcome suggests the main budget deficit for the 2022/23 fiscal year will end up close to Godongwana’s revised February estimate of 4.5%, though Treasury still has to establish the extent of underspending before it finalises the numbers.

The higher than expected refunds that Sars paid out for the year, make it clear that it will no longer hold back on refunds to flatter the revenue numbers, as former commissioner Tom Moyane allegedly did during the state capture years.

The 18% increase in refunds came as companies upped the investment spending on which they can claim back valueadded tax (VAT), investing in maintenance to mitigate the damage done by load-shedding as well as on backup power and new renewable energy sources.

The effect of SA’s energy challenges and reforms was also felt in higher customs duty collections on the increasing quantity of imports related to renewable energy investment.

Against this, the crises at Eskom and at Transnet also weighed on company profitability, particularly in mining where tax collections were down by almost 5%.

But Kieswetter said amid the dark clouds a new industry was emerging, with a 26% increase in tax collections from wind farms in the Western Cape during the year and the top 10 solar panel importers paying a total R3.8bn in taxes.

Sars said its efforts to

improve compliance had yielded R227bn in revenue, an increase from R215bn in the previous year.

Kieswetter said that public confidence in Sars had improved from 48% to 76% over the past four years and that augured well for improving compliance.

The tax authority has collected R77bn in unpaid tax debt during the year and its audit and investigation activities yielded R5.4bn of revenue.

Luxury vehicle and lifestyle audits have yielded hundreds of millions of rand of revenue, and PPE tender audits — from Covid — brought in R535m.

Sars is concerned about abuses of the employment tax incentive by companies.

It also has the secondhand gold sales in its sights, with the illicit gold, tobacco and fuel industries as areas of particular focus.

Kieswetter also said that the tax authority had collected R6.6bn as a result of investigations into criminal syndicates that colluded to defraud the fiscus and laundered cash into the banking system.

SPECIALISED UNIT

The large business centre, which has been reinstated since Kieswetter took over, plus Sars’ newly established high-wealth individuals’ unit, together collected a total of R528.3bn in revenue.

Kieswetter said that he was concerned about compliance levels about small and mediumsized enterprises.

Officials said the large business centre accounted for the largest chunk of the tax refunds, at R187bn of the total R318bn in refunds for the year.

That reflected higher rates of capital spending but also growth in exports, which are zero rated for VAT purposes.

The specialised large business unit caters for businesses or groups of companies with at least R1bn in turnover and has about 8,000 clients.

A new unit for high wealth individuals that Sars has established in the past three years collected R11bn in revenue, from 38,000 taxpayers.

COLLECTIONS

The final figures show growth in VAT collections of 8% was below the February budget estimate of 9.1%, while personal income tax collections grew 8.3%.

This was slightly lower than the 8.6% projected in February’s budget, but company income tax collections increased by 7.6% in line with budget estimates.

These three tax types together contribute about 80% of total tax collections.

Detailed figures showed that the number of individuals applying to emigrate for tax purposes declined during the year to 862 from 5,558 in the previous year.

But slow gains in employment meant that just 6,127 new contributing individual taxpayers came on to the tax register.

Though a total of 1.1-million new individual taxpayers registered, many of these may have incomes falling under the tax threshold of about R95,000 a year.