The effects of the 1% hike in the rate of VAT, effective on April 1, in the first two months of the 2018/19 tax year was evident, with tax collections for the period up significantly from a year ago.
The latest statement of national revenue, expenditure and borrowing at May 31 posted on the Treasury website shows that VAT collections for April and May were up 17.6% to R47.7bn compared with R40.6bn in April and May last year.
This is ahead of the forecast rate of increase in VAT collections for the full 2019 year of R348.1bn or an increase of almost 17% on the R298bn raised in the 2018 tax year.
The budget speech in February announced R36bn in extra taxes for the 2019 tax year, including an increase in the VAT rate from 14% to 15%, which is expected to contribute R23bn to the extra taxes.
Gross tax collections for April and May were R164.5bn, up 10.3% from the R149.2bn collected in April and May 2017. This is marginally behind the increase of 10.6% required in tax revenues for the 2019 tax year to achieve a full-year target, set out in the budget speech earlier this year, of R1.345trn.
Acting SA Revenue Service (SARS) commissioner Mark Kingon said this week that he couldn’t comment on the latest tax revenue figures issued by the Treasury as he hadn’t reviewed them.
However, he said June had been an important month for the tax collection agency especially when it came to company income tax and provisional tax payments.
SARS’ tax collections determine how government taxes affect state finances, including the budget deficit and the country’s credit rating, which affects borrowing rates.