According to National Treasury’s Medium Term Budget Policy Statement (MTBPS), expected gross tax revenue for the 2013/14 year has been revised downwards by R3bn to R895bn.
National Treasury says high wage settlements have supported personal income tax collection. Personal income tax, the largest source, accounted for 34% of total tax revenue.
Corporate income tax followed a similar trend, “but there is a degree of uncertainty about the second half of the fiscal year”. Strikes could curtail company profits.
“Lower domestic VAT and excise duties point to reduced consumer demand and weaker income tax collection over the medium term,” the MTBPS reads.
National Treasury believes factors that supported the resilience of other taxes could face headwinds. “This year’s sharp depreciation of the rand is unlikely to result in a sustained surge in company profits, as cost pressures increase and trade contracts are adjusted. Robust customs duties in the current year imply greater payments to South Africa’s partners in the Southern African Customs Union in the years ahead.”
The MTBPS made no mention of revenues collected from environmental taxes such as the carbon tax on new vehicles or on carbon emissions from as early as January 1, 2015.
A Tax Review Committee, chaired by Judge Dennis Davis, is due to report by the end of the year.
National Treasury says expenditure over the coming three-year period will be aligned with its strategic objectives, notably those in the National Development Plan.