| Slow start to SARS tax collections

The SA Revenue Service (SARS) started the first month of the 2019 tax year on a pedestrian note.

During April, SARS collected VAT of R21.4 billion, up 6.2% from April last year’s figure.

However, this rate of increase lags far behind forecast VAT collections for the full 2019 year of R348.1 billion, or an increase of almost 17% on the R298 billion raised in the 2018 tax year, according to a statement published on the National Treasury website.

The budget speech in February announced R36 billion in extra taxes for the 2019 tax year, including an increase in the VAT rate from 14% to 15%, which is expected to contribute R23 billion to the extra taxes.

Gross tax collections for April were R79.5 billion, up 6.7% from the R74.5 billion collected in April 2017. This is slower than the increase of 10.6% required in tax revenues for the 2019 tax year to achieve a full year target, set out in the budget speech earlier this year, of R1.345 trillion.

SARS collected R1.216 trillion in the 2018 tax year, R740 million below the 2018 budget speech target.

However, when compared to the 2017 budget speech, when the goal was R1.265 trillion, SARS missed that target by R48 billion.

Kyle Mandy, a partner and head of national tax technical at PwC South Africa, said it was difficult to determine a trend following just one month of data, but April did show SARS had made a slow start to the tax year.

Key to SARS achieving the tax collection target for 2019 will be a pick up in economic growth, and the level of inflation and improved tax buoyancy, which is an indicator to measure efficiency and responsiveness of tax collection when compared with GDP growth.

SARS’ tax collections determine the level of government taxes and has an impact on government finances, including the budget deficit and the country’s credit rating, which affects borrowing rates.

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