The South African Revenue Service was a fraction of a percentage off its estimates in tax collection for the 2017/18 financial year, collection R1.216 trillion – 0.06% lower than the estimate of R1.217 trillion.
Despite the slightly lower collection, revenues were up 6.3% from the 2016/17 financial year, with the taxman collection R72.4 billion more.
In announcing the numbers, finance minister Nhlanhla Nene stressed that these were preliminary results and not the final numbers, which are still subject to a final audit.
According to Nene, SARS collected a gross amount of R1.451 trillion, which was offset by refunds totalling R234.3 billion.
The minister said that revenue collection is closely tied to the state of the economy, and that the 2017/18 financial year was characterised by low growth patterns which impacted most sectors.
However, there was a reverse in this trend with an uptick in business and consumer confidence in the last quarter of the year (January to March 2018).
This was helped by the strengthening of commodity prices and a stronger rand, Nene said.
Despite this, the recovery is yet to translate into higher employment numbers and strong growth in wages – as a result pay-as-you-earn (the largest contributor to the SARS tax portfolio) came in at 8.6%, significantly below the 9.2% levels experienced in previous years, Nene said.
This is how the tax revenue was broken down:
- Personal Income Tax: R462.5 billion (38.0%)
- VAT: R 297.8 billion (24.5%)
- Corporate Income Tax: R220.2 billion (18.1%)
- Customs tax: R49.4 billion (4.1%)
Nene said that for any tax authority, tax compliance was one of the key determinants of its revenue performance.
Here, SARS has seen a deterioration in compliance, indicated by the overall growth in outstanding returns across all tax types.
“More concerning though, it the increasing tendency of business to withhold taxes such as VAT and PAYE collected on behalf of SARS,” he said.
SARS has stepped up its ‘outreach and enforcement’ programmes, Nene said, and has made over one million outbound calls to taxpayers. This process will be boosted in 2018/19 until the matter is under control, he said.