Sars ‘may have a mountain to climb’
GIGABA: ACTION PLAN FOR STRUCTURAL ECONOMIC REFORMS TO BE ANNOUNCED SOON
Revenue service faces a steep challenge to meet its target of collecting R1.265 trillion.
In some cases, in recent years tax collection as a ratio of GDP has been even higher than it was during economic boom times in SA.
The South African Revenue Service (Sars) may have to climb a mountain to meet its R1.265 trillion tax revenue target for the 2017-18 fiscal year, said its commissioner, Tom Moyane, yesterday.
He said the economy had entered a technical recession and some companies had already shed jobs. While Sars was resilient, the economic environment had a concomitant impact on its ability to collect what was due to the fiscus. If the economic contraction continued, Sars would have a “mountain to climb”, he said.
Finance Minister Malusi Gigaba said even during difficult economic conditions, Sars had continued to collect more than R1 trillion in revenue. “For them to exceed that target they need the economy to be kicking.”
As economic growth faltered over the past few years, revenue collection figures have been revised downwards. In the 2016-17 tax year, Sars collected R300 000 more than the revised target of R1.144 trillion at the 11th hour.
The revenue service collects 90% of all government revenue.
Failure to meet the target would put pressure on the fiscal framework and may require government to borrow more money or increase taxes.
But although growth has slowed, tax collection as a ratio of GDP has remained surprisingly buoyant. This has largely been due to limited fiscal drag relief, high wage settlements, a shift towards highly skilled workers and resilient VAT collections. But there are concerns this buoyancy may not be sustainable.
Asked whether Treasury still expected Sars to meet the revenue target set in the February budget, Gigaba said an announcement would be made during the medium-term Budget policy statement. Government would announce an action plan to implement certain structural reforms in the economy after the ANC’s national policy conference. The plan was drawn from 13 issues it had identified and that had consistently been raised by investors and ratings agencies.
“It is extracted from the ninepoint plan. It provides an action list of things to do. So, as you do things and complete them you cancel them off the action plan so that we are able to both measure ourselves and get measured by our social partners on the extent to which we are implementing these specific action items,” said Gigaba.
“The problem with us not undertaking that route is that these issues remain there lingering forever without business knowing what is going to happen by what time and it will be done by whom.”
Some of the issues related to the mining industry, broadband and spectrum allocation and fiscal policy, including the office of the chief procurement officer.
Gigaba said he had meetings with various business organisations and scheduled engagements with labour. Government wanted all partners to focus on building the economy, reigniting growth, boosting business confidence and getting investments going so it could create jobs and expand the tax base.