Tax revenue projected to fall short by R50.8bn

THE SA Revenue Service (Sars) and National Treasury said total revenue collected for the fiscal years from 2007/8 to 2016/17 amounted to R8.13 trillion.

Sars said tax revenue all but doubled in 10 years, increasing from R572.8 billion in 2007/8 to R1.1 trillion in 2016/17.

The two said adjustments to the tax brackets and the tax threshold to account for fiscal drag had resulted in lower marginal tax rates for low- and middle-income taxpayers.

“Measures to include the taxation of capital gains and taxing individuals on a residence basis on worldwide income have served to broaden the tax base, thus ensuring that the tax burden is spread more equitable.”

Deteriorating revenue collection and downward revisions to economic growth projections have significantly eroded government’s fiscal position.

Tax revenue, as described in the Medium-term Budget Policy Statement, is projected to fall short of the 2017 Budget estimate by R50.8bn, the largest under-collection since the 2009 recession.

Sars said 42% of assessed taxpayers were registered in Gauteng, while 26.9% of assessed taxpayers were aged 35 to 44 years; and 55.1% were men.

Sars said revenue from personal income tax, as a percentage of total tax revenue, increased from 29.6% in 2007/8 to 37.2% in 2016/17 – 8.4% of gross domestic product (GDP) over this period.

Sars said on average, net VAT accounted for 25.9% of total tax revenue, with net VAT collections comprising 6.4% of GDP for the period. Corporate income tax, the third largest contributor to total tax revenue for the past decade relative contribution has declined from a peak of 26.7% in 2008/9 to 18.1% in 2016/17.

Ettiene Retief, the chairperson of national tax at the SA Institute of Professional Accountants, said Sars must be held to the same standards as the taxpayer.

“It’s not unheard of for companies to wait many months for a refund to be processed. Many are turning to the Tax Court or Tax Ombud for relief. The cost in cash flow is a major hindrance to business.

“The total cost of tax compliance must be taken into account, because it’s a vital factor in judging real efficiency,” Retief said.