The South African Revenue Service (SARS) wants to increase tax collection in South Africa, with plans, strategies and the biggest risks to do so over the next few years contained in its annual performance plan for 2022/23.
SARS commissioner Edward Kieswetter stated that the continuous spread of Covid-19, along with its associated restrictions and the continual load shedding, remains a major pull-back to economic growth and continues to have adverse effects on revenue collection.
The report notes that year-on-year tax revenue collection targets have become increasingly hard to reach.
According to the National Treasury and SARS joint publication on 2021 Tax Statistics, revenue collection for the 2020/21 fiscal year amounted to R1 249.7 billion, an annual decline of R106.1 billion – roughly 7.8%.
SARS said it wishes to demonstrate a full understanding of the economy including causal factors for this decline, while curbing exemptions, thereby reducing the tax system’s complexity and boosting revenue by broadening the tax base.
“There are many areas where SARS continues to fall short with respect to improving taxpayer and trader experience, and we are committed to resolving systematic issues that negatively affect taxpayers and traders across all SARS interactions,” said Kieswetter.
The commissioner added that the tax body is aware that taxpayer confidence in SARS is still not where it needs to be. Research showed that taxpayers’ attitudes towards compliance and their willingness to comply are influenced by how they perceive taxes to be utilised by the government.
“Loss of public confidence due to concerns about corruption in the public sector and poor service delivery has the potential to undermine and make it difficult for SARS to increase voluntary compliance. The poor state of governance at municipal level is contributing to poor service delivery and declining public confidence in government at large.”
SARS said that rebuilding trust is key to how its new ‘revenue recovery programme’ can achieve its aim of raising overall revenue by 5% to 10%.
The revenue service’s Tax Statistics 2021 shows the distribution of taxpayers, taxable income and tax assessed by province and municipality.
Assessed individual taxpayers by province, 2019 – 2020
Tax data shows that the most assessed taxpayers were based in Gauteng in the 2021 tax year, and the highest average taxable income at R408,537, followed by Western Cape (R341 943), Limpopo (R316,991), Northern Cape (308,501), KwaZulu-Natal (R306,323) and Mpumalanga at R302,354.
The Free State Province had the lowest average taxable income at R282,932, replacing the North West in 2019.
In 2019, Gauteng showed an average taxable income of R435,239 followed by Western Cape at R363,758, Limpopo at R346,517, Mpumalanga at R342,393, KwaZulu-Natal at R329,141, and Northern Cape at R320,289.
The Eastern Cape and Free State Province had the next lowest average taxable income at R307,202 and R291,409 respectively. The North West had the lowest average taxable income at R291,239.
Distribution by source of income 2020
SARS showed that nearly 5.1 million individual taxpayers received income in 2020 from remuneration, pensions or annuities. More than 3.2 million of these taxpayers also received annual payments in bonuses or leave pay.
In 2020 more than 379,000 individual taxpayers earned local interest income that exceeded the exemption limit applicable for interest. Interest from a South African source earned by any natural person under 65 years of age, is exempt from taxation up to R23,800 per annum, and for persons 65 years and older, up to R34,500 per annum.
The taxable portion of local interest increased from R25.6 billion in 201 7 to R 33.5 billion in 20 20. The number of taxpayers with taxable foreign interest decreased slightly from 231,243 in 2017 to 230,855 in 2020.