SARS collection statement ‘just a publicity stunt’

Tax analysts are sceptical about the timing of the latest revenuecollection statement by the South African Revenue Service (SARS), calling it nothing more than a public relations stunt.

Citi economist Gina Schoeman said SARS released the statement because it was criticised for not being as efficient as it should have been. “They have to start celebrations, but we still have a huge fiscal hole. It’s important for team morale to celebrate but they have to be realistic,” she said.

SARS has patted itself on the back for collecting R1-trillion in taxes, saying it was the third successive year it reached this “milestone” and “crossed the psychological threshold of the one-trillion rand mark”.

Kyle Mandy, head of tax policy at PWC, said: “The statement is meaningless. What they actually collect in terms of the revenue target is what is important. SARS had released such statements in the past few years to change the perception about its poor performance.

SARS commissioner Tom Moyane said that the “achievement” was testament to the service’s commitment to reaching its higher revenue target.

Managing partner for Africa tax and legal services at Deloitte Nazrien Kader said that SARS had only until the end of March to collect the remaining R217bn, but February was expected to be a higher revenue month.

“Overall, I wouldn’t start the celebrations just yet,” she said.

Schoeman and Mandy said SARS would meet its revenue targets based on Wednesday’s budget, but emphasised that this was less than the R1.265-trillion target announced at the start of tax season in 2017.

Finance Minister Malusi Gigaba announced that the expected revenue that had to be collected by the end of March had increased from R1.214-trillion to R1.217-trillion.

SARS has admitted that a decline in tax morality contributed to revenue shortfalls on a scale not seen since the 2008 financial crisis, putting pressure on public finances.

While the revenue service improved collection by R2.6bn in the fourth quarter of 2017, based on an improvement in company and trade taxes collected, the Treasury is still expecting a shortfall of R48.2bn for 2017-18.

According to SARS, this reflects weak economic growth, administrative challenges within the agency and increased tax avoidance.

Returns from personal income tax had dwindled due to the slowing economy and low tax confidence, said SARS head of revenue and research Randall Carolissen.