Hannes van den Berg, CA(SA) and CEO at Consult by Momentum
SARS this week announced its annual tax revenue collection figures. Why is this significant? It points to how much revenue is available to fund the government’s socio-economic plans and basic service delivery. It also reveals interesting or concerning trends within the tax system.
On the upside…
- The key take-out is that SARS is doing better. It collected 8.3% more in personal income taxes compared to the last financial year. It gives us hope that SARS was able to collect more than R2 trillion in gross tax revenues over the past year – which is more than what the finance minister anticipated in this year’s Budget Speech (although still R5bn below SARS’ own revised estimate.)
- People that registered for Personal Income Tax increased by 4.53% = 1.17million new tax-payers, raising the taxpayer base to just under 26million.
- Pay-as-you-earn salaried people achieved 75% compliance.
- SARS Commissioner, Edward Kieswetter, said that SARS paid the highest VAT refunds ever – an amount of R319bn which is a surge of almost 22%, which is set to boost the economy.
- SARS ended with a tax buoyancy of 1.36%, which means that the tax revenues are growing faster than GDP – a very good ratio. The buoyancy of a tax system assesses the total response of tax revenue both to changes in the national income and to discretionary changes in tax policies over time. It is typically interpreted as the percentage change in revenue associated with a one percent change in income.
On the downside…
- It is concerning that the tax base is not growing proportionately with the new jobs that have been created.
- Only 6 127 of the 1.17 million new personal income taxpayers in 2022/23 ended up paying pay-as-you-earn (PAYE) tax.
- This highlights that of the +-200 000 new graduates every year, many either did not find jobs, or found jobs that earned below the threshold of R95 750 per annum.
- The reduction on the compliance index for personal tax was noted, with a 4.5 percentage point decrease.
- Loadshedding is still taking a steep toll, costing businesses in the form of maintenance and downtime.
Also worth noting:
- Following the announcement, we saw an outcry on social media, demanding wiser and more diligent spending of revenue. People want corruption eradicated, as well as better service delivery.
- Current economic pressure coupled with high interest rates will place further pressure on revenue for 2023/2024 fiscal year.
- Good news on additional revenue (tax) from criminal / fraudulent activities.
- As mentioned in this year’s Budget Speech, the government needs to become more effective in spending tax revenue.