Faizel Patel – 26/02/2021

(Twitter: @FaizelPatel143

The South African Revenue Services (SARS) Commissioner Edward Kieswetter says there was a significant decline in revenue collection, which was exacerbated by the COVID-19 hard lockdown stifling the economy.

Kieswetter was speaking to Radio Islam on Thursday.

SARS has welcomed the upwardly revised revenue collection estimate announced by Finance Minister Tito Mboweni in his 2021 budget in Parliament on Wednesday.

Kieswetter says the Coronavirus pandemic had a devastating impact on tax revenue collection because of an economic collapse far greater than that of the 2008 financial crisis.

“As the economy opened up, some if that activity recovered and as you saw in the last quarter, it recovered a little bit more positive and then we had expected. But we did expect when we made the adjustment budget in June, the minister announced that we expected a shortfall of R313 billion rand.”

However, Kieswetter says Mboweni revised the shortfall during his budget.

“The minister revised that to a shortfall of only R220 billion which means almost a R100 billion additional revenue from what we thought initially would have been collected. All of this doesn’t bring us back to the 2019/2020 levels because we are still projecting an economic contraction of -7.2%. If you think about that, it’s a 12% shift in economic growth.”

Kieswetter says there is good news.

“The positive news is as a result of a third quarter recovery which was a little better than expected influenced significantly by platinum and mining on the back of improved Dollar prices for higher sales, so that was good news. But also, in the past year SARS has worked extra hard to address those areas of non-compliance and to recover some of the under-recovered revenue.”

Kieswetter says Mboweni’s decision not to increase direct taxes is not a real concern adding that they agree with the minister who has been consistent in his message that the country has reached a point of reflection in almost all standard taxes.

Listen to the interview with Edward Kieswetter