What to know before the mini budget
Earlier in the year, Treasury introduced a number of tax increases that placed significant strain on taxpayers.
It’s hoped the 2018 Medium-Term Budget Policy Statement (MTBPS) will show South Africans whether their sacrifices over the last six months have made a positive impact.
The update on South African Revenue Service’s (Sars) revenue collection efforts will likely generate interest.
Treasury set Sars’ revenue collection target at R1.345 trillion – up 10.3% from the previous financial year. This would be made possible through the increase in the VAT rate,
However, this figure now seems optimistic following announcements of a downward revision of SA’s growth rate.
The Reserve Bank has cut its estimate for SA’s GDP expansion to 1.2% from 1.7%.
It will be interesting to see whether the reduced consumer spending, low business growth and spiralling fuel costs will cause Treasury to revise collection targets downwards. he South African Revenue Service’s (Sars) acting commissioner Mark Kingon displayed in-depth organisational knowledge as he briefed parliament on Sars’ 2018 annual report to March 31 2018.
“We can’t afford mess-ups at Sars. It is an important organisation and it has to do what is right in every circumstance.
“We are going in the right direction, but we are facing choppy seas.” Performance bonuses were paid without the finance minister’s approval; such irregular expenditure amounted to R4.3 million.
Sars also incurred irregular ex- Sars is also dealing with the ombud’s finding on refunds. Ten cases have been dealt with and a new system to end the problems experienced with stoppers on refunds is being put in place. The VAT and diesel refund accounts will be split. Kingon noted that:
Sars has halted non-core litigation to focus on its core mandate.
It’s trying to shorten branch queues by focusing on improved service delivery in other areas. Kingon’s optimistic that ultimately taxpayers should be able to self-service and not have to contact a call centre or visit a branch.
While there are concerns about the IT system, this aspect was misconstrued in the press; the Sars system won’t collapse.
The current eFiling platform is reaching the end of its cycle and will be replaced with Html5 for the 2019 tax year. The IT infrastructure must be refreshed. Sars is 6.3% revenue growth year on year, with 1.3% GDP growth. 94% filing compliance. 93.63% returns assessed within the first 24 hours of receipt cycle. R2.7 billion in fraudulent claims prevented. 17.2 million tax returns submitted in 2018 (2017: 16.6 million). Sars has established an illicit economy unit that’s currently dealing with 58 cases. Primary concerns are tobacco and fuel.
Total revenue accounts collected, comprising taxes, levies, duties, fees and other monies, amounted to R1.3 trillion (2017: R1.2 trillion).
Total revenue from rendering of services, other income, and interest received, amounted to R554.7 million (R1 191.2 million).
Total expenditure, comprised mainly of R7.5 billion employee costs (R7.2 billion), amounted to R10.9 billion (R10.8 billion).