Budget 2022: Revised revenue collection estimate pleases the tax man

The South African Revenue Service (Sars) has welcomed the revised revenue collection estimate announced by Minister of Finance Enoch Godongwana on Tuesday.

In this year’s budget, Godongwana increased the revenue estimate to R1 547.07 billion from the February 2021 budget estimate of R1 365.1billion. 

The 2021/22 revenue yield is expected to result in the tax-to-GDP ratio reaching 24.7%, higher than the pre-Covid level, indicating the extraction rate is on a positive trajectory.

As of 31 January 2022, Sars collected more than R1.2 billion, yielding a prior year growth of R275.1 billion (28.2%) and growth of R169.6billion (15.7%) against 2019/20 collections. 

The majority of collections against printed estimates show an upward trend with the growth mainly driven by:

• Net corporate income tax (R91.4 billion, 55.8%) 
• Net personal income tax (R30.5 billion, 7.4%) 
• Net value-added tax (R15 billion, 5.0%)

“We remain cautiously optimistic that we will meet the new revenue estimate,” said Sars Commissioner Edward Kieswetter.

Since its formation, Sars has collected more than R16 trillion for the country’s social and economic development. 

“This revenue has enabled the government to improve the lives of millions of South Africans through healthcare, education, social grants and other basic services,” said Kieswetter. 

Commodity prices have been thriving in the past few months; therefore, key Sars segments and regions have benefited from higher global demand for commodities. 

The extra income earned by commodity-producing and exporting companies accompanied by Sars’ deliberate and targeted tax compliance work have resulted in a better than expected increase in tax revenue.

The tax collector said compliance-related activities had yielded positive results, with a  notable year on year increase of 18%. 

This comprises focused and deliberate work audits of large businesses that have generated additional revenue of more than R4 billion. 

The Illicit Economic Unit has seen finalised investigations and conducted several searches and seizures, which netted nearly R6 billion. 

Collections of excise duties are recovering from the trade restrictions imposed due to the Covid-19 ban on sales, especially on alcohol, with companies now paying duties deferred during the pandemic. 

Continued electricity supply constraints and high inflation – with a dire impact on consumer demand and disposable income –  pose challenges on revenue collections.

Compiled by Narissa Subramoney

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