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News & Press: Opinion

Global crisis hits you, me and SARS

04 June 2012   (0 Comments)
Posted by: SAIT Technical
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By Matthew Lester (Tax Talk)

I am often asked where I source all the statistics quoted in this column. The answer is the SA Revenue Service and National Treasury. It's all there on the websites.

SARS commissioner Oupa Magashula recently used the fourth edition of the SARS statistical report to demonstrate to parliament the true costs of the global financial crisis to South Africa.

From 1995 to 2008 the compound annual growth rate in tax collections grew at 13.2%. From 2008 to 2011 it slowed to 5.9%. And that has cost R255-billion in tax collections over three years.

So when the pub talk degenerates to "Zuma cannot deliver, here comes Zimbabwe mark II”, the retort should be: "With growth in tax collections only just keeping pace with inflation, there is no extra money for accelerated delivery. Or are you suggesting South Africa increases tax rates across the board?”

The SARS statistics clearly show that two of the big three taxes have been hammered by the financial crisis. Companies have clocked up huge assessed losses and can use them up before paying tax again. And while the consumer sulks at home, VAT collections suffer.

So the pressure has to be absorbed by the individual taxpayer. About 98% of personal income tax is now recovered through the employees' tax system. And the revised provisional tax rules collect the rest.

Even more frightening is that a mere 378307 taxpayers earn over R400000 a year. That's less than one in 100 South Africans.

Before reaching for the bottle or something stronger, please accept that our recovery in tax collections is going far better than other countries', including the eurozone, US and Australia.

Two years ago there were many pundits calling that the global credit crunch was just a blip on a radar screen. How wrong they were. The crisis changed everything from tax collections to the way we will live in the future.

The SARS statistics report is 150 pages long and can even be downloaded in Excel format. This, coupled with the National Treasury Budget Review documentation, is released on budget day every year. They make the budgetary process, at least from a tax perspective, one of the most transparent in the world.


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