South Africa’s tax base isn’t shrinking: SARS
South African Revenue Service (SARS) commissioner Edward Kieswetter says the country’s tax base will add over 1 million new registrations this year.
He said that SARS is constantly broadening the tax base.
While not all new registrants will be contributing taxpayers – with Kieswetter calling them “aspirant employees” who register for tax – he noted that the revenue services has already added R5 billion to the pot from these new registrations alone.
The SARS commissioner previously stated that headlines speaking to the shrinking tax base and emigration are overstated, with the group only seeing around 6,000 taxpayers leaving the country in the last year. Only a small portion of these were top-end earners, he said.
In addition to taxes from a brader tax base, the group is also focused on boosting compliance among the existing base.
Kieswetter said that SARS is not declaring victory over higher than expected tax collections mentioned in the Budget Speech this week (22 February), and will continue with its efforts to claw in money that is owed to it.
During the speech, finance minister Enoch Godongwana revealed that state coffers were boosted by better than expected tax revenues, which were reported to be R93.7 billion higher than the estimate given in the 2022/2023 budget.
Personal income tax collected in 2022/2023 is forecast at R601.6 billion, up R13.7 billion from the R597.9 billion estimated at the time of the 2022/2023 budget, the minister said.
“The improvement in revenue is due to higher collection in corporate and personal income taxes and in customs duties. This partially offset the lower value-added tax estimates.
“Our country is reaping the benefits of a more efficient and effective tax administration that is building trust to increase voluntary compliance and boost revenue collections,” the minister said.
Kieswetter said that SARS won’t be resting on its laurels and will be ramping up it collections and administrative action.
“SARS doesn’t sit and wait for monies to flow in – it has to engage actively with taxpayers to ensure that the moneies that are due ends up in the coffers of government.”
Year to date, the commissioner revealed that SARS has collected R167 billion through “focused compliance actions” on taxpayers. This includes over 1.5 million phonecalls to follow up with taxpayers that owe the revenue service money, as well as launching legal action against those who have broken the law.
“We send SMSes, we make follow up calls, we send letters – we’ve sent over 540,000 letters of demand – we have to send out civil judgements,” he said.
In the numbers that the minister reported, these actions represent R61 billion in outstanding debt.
“It’s not one big thing; it’s about doing many little things and doing it right and with focus,” he said.
The revenue service is also pursing cases of fraud, and other tax crimes, through which is has already recovered around R4 billion. Kieswetter said hundreds of cases are still underway, and hundreds more are pending.
By boosting collections by R93.7 billion above projections, this means that this is R93.7 billion that doesn’t need to be borrowed at significant cost to the economy, he said.
The bulk of this will be going towards social spending, where 29 million people in the country will benefit.
Kieswetter said that more than 50 cents in every rand collected goes to social spending to protect those suffering in a country hit by high levels of unemployment and distress.
He repeated statements from earlier this month, saying that South Africa has a large number of taxpayers, individual and corporate, who are not tax compliant – and this provides SARS with ample opportunity to draw in more revenue through focused administering of the country’s tax laws.
“We have many opportunities to improve tax collection – just by being effective.”
Read: SARS is not slowing down – despite red flags over South Africa’s shrinking tax base
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