Corporate tax declines, new statistics reveal

ALMOST 60% of SA’s corporate tax came from just 325 large companies, reflecting the concentrated nature of the economy, the latest Tax Statistics Bulletin revealed on Tuesday.

It also showed that the contribution to state revenue from corporate taxes had declined sharply in recent years, with personal income tax bearing more of the burden.

The bulletin Treasury and (SARS).

Launching the bulletin, SARS group executive for tax, customs and excise duty Randall Carolissen said while the contribution from larger companies that were more exposed to the global environment had declined, that from small- and medium-sized companies was growing strongly.

“We are taking the lessons learned from big companies to get more out of smaller companies,” he said.

The three big taxes – personal income tax, corporate income tax and value-added tax – still make up about 80% of the total tax take each year but the mix has shifted significantly, with the contribution from corporate tax sliding to 18.1% of total tax revenue from a peak of 26.7% going into the financial crisis in 2008-09.

Over the same period, the contribution from personal income tax jumped to more than 36%, with collections growing 10% in the latest fiscal year.

The public purse has benefited from the fact that growth in tax collections since the financial crisis has been faster than economic growth, thanks to tax hikes and improved compliance.

That is reflected in a “tax buoyancy” ratio, which has been above 1 since 2010-11, but the figures show that SA is starting to lose that advantage, with buoyancy sliding to 1.42 in the latest year from a post-crisis peak of 1.48.

SARS managed to collect R1.07-trillion in the latest year, representing growth of 8.5%, which Carolissen said was significant given the low economic growth environment and “some of the operating difficulties”.

The target this fiscal year has been raised to R1.152trillion, which is 7.7% growth. — BDLive is a joint annual publication by the the South African Revenue Service