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More people are filing VAT refund claims, which reflects that people believe they will get their refunds back, an official of Treasury has said.
The standing committee on finance was briefed by a team from Treasury, who responded to issues raised by the public about the National Budget at a hearing in Parliament earlier this week.
Chris Axelson, Treasury's chief director of economic tax analysis, responded to queries raised about VAT refunds.
Axelson said that following discussions with SARS, it was agreed that it is necessary to reduce the backlog in VAT refunds, even though it would have an impact on tax revenue figures. "The minister was vocal in his speech that this money should go back to taxpayers, it shows people can trust SARS more if they can get these payments," Axelson said.
The Budget Review states that Treasury has revised up VAT refunds by R8bn.
SARS has also been making more payments, he said. The VAT credit book, which shows how much SARS owes taxpayers in VAT refunds, was at R42bn in September 2018. By mid-February 2019 it stood at R25bn.
According to the medium-term budget policy statement, the level of the credit book should be at least R19bn, if refunds are paid as they are due. After having further discussions with SARS, Treasury projected the credit book to be R22bn, in the national budget.
He explained that there was going to be an outstanding amount, because SARS has to vet claims, to make sure they are not fraudulent.
"It seems more taxpayers are making claims to SARS. It is a good thing because it shows they believe they will get their refund back, which will help with their cash flow position," he added.
