{"id":839181,"date":"2025-10-11T07:00:00","date_gmt":"2025-10-11T05:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=839181"},"modified":"2025-10-10T16:23:09","modified_gmt":"2025-10-10T14:23:09","slug":"the-tide-is-turning-in-south-africa-4","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/839181\/the-tide-is-turning-in-south-africa-4\/","title":{"rendered":"The tide is turning in South Africa"},"content":{"rendered":"\n

South Africa\u2019s latest government revenue and expenditure data surprised on the upside, suggesting the country may stay on track to achieve fiscal consolidation this year despite sluggish economic growth.<\/p>\n\n\n\n

This is according to Stanlib Chief Economist Kevin Lings, who noted that South Africa\u2019s National Treasury\u2019s data on government revenue and expenditure was better than expected.<\/p>\n\n\n\n

A detailed breakdown of the tax revenue data reveals that individual income tax has risen by a respectable 8.4% y\/y in the first five months of the tax year, while corporate tax collection has increased by 6.9%. <\/p>\n\n\n\n

Importantly, VAT receipts are up a substantial 11.4% y\/y, helped by a drop in VAT refunds.<\/p>\n\n\n\n

Lings explained that data indicates that when we get the update for the Medium-Term Budget in November, we should have a set of numbers that look reasonably on track to achieve fiscal consolidation. <\/p>\n\n\n\n

\u201cIn other words, we\u2019re managing to avoid a further deterioration in South Africa\u2019s fiscal balances,\u201d he said. <\/p>\n\n\n\n

Lings noted that government revenue has been stronger than anticipated, particularly in corporate tax collections. <\/p>\n\n\n\n

\u201cCorporate taxes exceeded expectations and have continued to perform well. If we look at where the gold and platinum prices are, there could even be some upside surprise to corporate tax revenue as we get deeper into the year,\u201d he said.<\/p>\n\n\n\n

Individual tax collections have also been holding up, although not growing rapidly. \u201cYou wouldn\u2019t say it\u2019s especially buoyant because we\u2019re simply not creating enough formal sector jobs for that to happen.<\/p>\n\n\n\n

\u201cHowever, it has been a decent performance and it\u2019s on track to achieve the sort of budgeted numbers the government put forward in their final budget attempt,\u201d Lings explained.<\/p>\n\n\n\n

Value-added tax (VAT) collection has been another area of strength, though partly because of lower refunds. \u201cThe area that is overall doing very well is VAT collection,\u201d Lings said. <\/p>\n\n\n\n

\u201cBut VAT refunds have actually declined.  SARS stated that they would attempt to reduce the backlog of VAT refunds, but they have not done a particularly effective job in doing so. What it\u2019s done, however, is give them some buoyancy within VAT collection overall.\u201d<\/p>\n\n\n\n

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Overall fiscal trend is encouraging <\/h2>\n\n\n\n

The combination of strong corporate taxes, stable personal income tax, and resilient VAT collection has placed government revenue in a solid position. <\/p>\n\n\n\n

\u201cIf you take those three key items, which make up the bulk of South Africa\u2019s tax revenue, you would say that\u2019s putting us in a very good position to achieve the revenue outcome that was put forward earlier this year,\u201d Lings said.<\/p>\n\n\n\n

On the expenditure side, government spending is behind budget, although this is something Lings said can be interpreted in different ways. <\/p>\n\n\n\n

\u201cYou can argue that\u2019s either good or bad. In a country struggling with infrastructure, you wouldn\u2019t think the government would be underspending,\u201d he noted. <\/p>\n\n\n\n

\u201cHowever, if you look at the effectiveness of government spending, which hasn\u2019t been good, then any form of underspending perhaps can be seen in a positive light.\u201d<\/p>\n\n\n\n

And this is how Lings has interpreted it. The result of stronger-than-expected tax receipts and slower expenditure is that South Africa\u2019s fiscal balance is holding up better than expected. <\/p>\n\n\n\n

\u201cYou\u2019ve got a fiscal balance that\u2019s holding on reasonably well, and an element of fiscal consolidation that continues,\u201d said Lings.<\/p>\n\n\n\n

\u201cI don\u2019t think we\u2019re going to see significant fiscal deterioration, even though the economy is barely growing at about 1%.\u201d<\/p>\n\n\n\n

Looking ahead, Lings said the Medium-Term Budget Policy Statement, which has been postponed to 12 November, will provide a clearer picture of the government\u2019s fiscal position. <\/p>\n\n\n\n

\u201cNormally that occurs in October, but because the budget itself was late in finalising, the Medium-Term Budget has been pushed out by a month,\u201d he said.<\/p>\n\n\n\n

He added that another key event to watch is the Financial Action Task Force\u2019s (FATF) meeting on 24 October, where South Africa\u2019s potential removal from the grey list will be decided. <\/p>\n\n\n\n

Along with this, Lings remained encouraged by the overall fiscal trend. \u201cIf I look at South Africa\u2019s fiscal parameters and the way the main budget numbers are being managed, you would say that\u2019s a very decent outcome,\u201d he said. <\/p>\n\n\n\n

\u201cIt puts us in a position where we can demonstrate ongoing fiscal consolidation and hopefully, at some point, leverage that position into more substantial growth and improved confidence.\u201d<\/p>\n\n\n\n

\u201cFor the moment, we\u2019ve got to accept that it\u2019s tough going. But at least the tax revenue is holding up even though the economy is not performing especially well,\u201d he added.<\/p>\n","protected":false},"excerpt":{"rendered":"

The National Treasury\u2019s latest data on government revenue and expenditure was better than expected.<\/p>\n","protected":false},"author":92,"featured_media":704955,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[3796,853,1482,2887],"class_list":["post-839181","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-national-treasury","tag-south-africa","tag-stanlib","tag-tax"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/839181","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=839181"}],"version-history":[{"count":5,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/839181\/revisions"}],"predecessor-version":[{"id":839264,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/839181\/revisions\/839264"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/704955"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=839181"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=839181"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=839181"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}