SARS beats tax collection target
02 April 2015
Posted by: Author: Ntsakisi Maswanganyi
Author: Ntsakisi Maswanganyi (BDlive)
The South African Revenue Service (SARS) exceeded its tax revenue target, collecting R986.4bn for 2014-15, which was R7.4bn higher than a revised target of R979bn.
SARS’s beating of the target was a welcome surprise as the agency had been wracked by internal turmoil during which senior executives were suspended, disciplined or resigned.
Finance Minister Nhlanhla Nene said that as the figures were preliminary, it was not yet clear what the effect would be on the budget deficit estimate of R152.4bn, or 3.9% of gross domestic product.
"By around June we will be in a position to work out exactly what the impact of this performance is going to be on our forecasts," he said.
Head of tax at Deloitte Nazrien Kader said the R7.4bn was "not going to impact (on) the budget deficit in any great way".
SA’s twin deficits — in the current account and budget — are closely watched by rating agencies. The agencies have urged the government to close the gap between spending and revenue to avoid further downgrades, which would raise borrowing costs and dent business confidence.
Treasury director-general Lungisa Fuzile said it was "too early" to speculate on whether there would be any changes to the budget deficit forecast for this fiscal year.
Mr Nene said 2014-15 revenue growth "remained resilient" despite the weak economy and low business confidence.
Better collections were partly due to improved compliance and policy reforms, including a broader small business tax base; increased focus on contact centres; and a voluntary disclosure programme.
Personal income tax revenue amounted to R353.8bn, which was R3bn higher than estimates.
Corporate income tax revenue of R186.9bn was R2.3bn above target, while revenue from value-added tax was R500m higher at R261.1bn.
Mr Nene said he did not want to pass judgment on whether the ructions at SARS had affected the numbers, but said the "team had performed exceedingly well under the circumstances".
SARS has been rocked by the resignations and suspensions of senior officials linked to an alleged "covert" unit.
A panel, appointed by Mr Nene and headed by retired Judge Frank Kroon, is to "look at the entire architecture" of the agency and advise Mr Nene and SARS commissioner Tom Moyane on ways to strengthen its capability.
Deputy Finance Minister Mcebisi Jonas said a number of initiatives would feed into the work of the panel, including that of audit firm KPMG, which is assessing and evaluating SARS at a "technical level".
Work done by consulting firms Gartner and Bain would also be included.
He said the immediate focus would be on the contentious unit, which has been disbanded.
"Part of what they are doing is to advise the minister and the Treasury and the commissioner on how to deal with that so in the future you don’t have those things arising," Mr Jonas said.
He stressed that the panel would take a medium-to long-term view on strengthening tax administration, and that this did not mean SARS would no longer have an investigations capacity.
He said the matter needed to be "depersonalised" and refocused on the "substantive issues" such as maintaining SARS’s credibility and strengthening its systems.
This article first appeared on bdlive.co.za.