Tax stats worrying – Sars

2012-10-22 14:41

Tax revenue collection has not recovered much from the 2009 economic slump, SA Revenue Service (Sars) spokesman Adrian Lackay said.

Lackay and a Sars team released the latest tax statistics in Parliament.

They showed that R742.6 billion in revenue was collected in 2011/12, almost R4 billion higher than Finance Minister Pravin Gordhan predicted in his February budget speech.

However, the tax-to-GDP ratio had remained stagnant compared to the figures in 2009, when business and profits in the country were constrained by the global economic crisis.

The country suffered a R60 billion tax loss during the downturn.

“The tax-to-GDP ratio in 2008 bordered below 28%, went down to 24.5% the following year, and is now sitting at 24.6%,” said Lackay.

This meant companies were still reeling from the after-effects of the constrained economic activity which followed the downturn.
“Corporate Income Tax (CIT) lags behind shifts in the economy.”

The exact figures would only become known much later, as companies had a later financial year than Sars.

“Definitively, when GDP activity is lower, you see lower company profitability and that affects CIT significantly.”

Lackay said companies were resilient in the first half of the year, but dynamics in the economy, including wildcat strikes in the mining sector, meant Sars was expecting lower profitability for companies.

“It will probably manifest itself during December, January and February next year,” he said.

Lackay said the labour unrest could also become apparent in two ways – in monthly trade statistics, and through lower exports.

“Minerals are a big contributor to South African exports, specifically to Asia, the Eurozone, the [United Kingdom] and also the [United States], so we can expect lower outputs and low exports of minerals,” Lackay said.

The real impact on company profitability will only be felt next year.

The number of companies listed on the CIT register showed negative growth of 2.1% by March 31.

This followed double digit positive growth in 2011.

Sars statistics showed that only a third of companies assessed during 2011/12 declared taxable income.

The rest declared either zero profits or losses.

Sars was much more upbeat about the growth in Personal Income Tax (PIT), with a steady increase in the number of people submitting returns from 1.7 million people registered in 1994, to six million people submitting income tax returns by 2012.

“There are 13.7 million working South Africans who pay PIT through employers?...?some don’t have to submit returns because they fall below the threshold.”

Currently, non-pensioners earning below R63 556 a year were not required to pay tax.

Lackay said Sars’ modernisation unit had done good work since 2007, giving a clear picture of people working in the formal environment and which sectors employed them.

Similar changes were had been made in customs and excise. Sars was now moving into a similar operation with regard to CIT.

“We’ll have to do a similar operation like with Value Added Tax: clean up the registers, check who really are registered as businesses and what economic activities they are involved in, and from there check who is on system and who is not supposed to be there,” said Lackay.

Asked about the potential of huge scale fraud with company taxes, he said the risks were much smaller than with VAT.

“CIT, you can claim losses, but the magnitude, scale and potential for you to con the fiscus is stricter ... VAT is far riskier regarding fraud.”

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