South Africa collected R1.25 trillion in tax revenue in the financial year ended March 31, about 12% less than government’s original target of R1.425 trillion, the SA Revenue Service (Sars) said this week.
The economy, which was in recession even before Covid-19 struck, shrank by 7% last year, while unemployment soared.
This led to a record budget deficit as government was starved of revenue while forced to spend more to fight the virus.
The initial 2020/21 target of R1.425 trillion was set by the National Treasury before the pandemic struck in March last year.
Treasury revised the estimate down to R1.112 trillion in October, but then upped it to R1.212 trillion in this year’s budget, which was delivered in February.
Sars said improved economic activity; higher collections of company tax, especially among mining companies; and greater tax compliance had led to better collection than the February target.
Sars commissioner Edward Kieswetter said that, to close the gap, the agency would focus on stricter compliance, especially by high-net-worth individuals.
“Sars is aware of an increasing number of South Africans who have financial assets offshore ... they have more than R400 billion in offshore accounts.
“We’ve identified around 10% of that, but we believe there’s still a lot to be explained,” Kieswetter said.
He added that the bans on the sale of alcohol and tobacco during the strictest periods of the Covid-19 lockdowns cost the country about R14 billion in lost excise taxes. – Reuters