Concerted efforts by the South African Revenue Service (Sars) to collect outstanding debt and to drive taxpayer compliance across all tax types have yielded R172 billion for the fiscus, the tax authority confirmed this week.
However, Sars Commissioner Edward Kieswetter admits that tax compliance levels remain under strain, with a drop from 65% to around 62.6%. The impact and prevalence of corruption and waste is not helping to enhance tax morality in our society, he warned.
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Read: Better-than-expected tax collections bode well for SA
Tax morality is generally influenced by the effectiveness of government and the delivery of services in exchange for individual and corporate taxpayers’ contributions.
Sars said in a statement – ahead of Finance Minister Enoch Godongwana’s first mid-term budget policy statement (MTBPS) on Thursday – that it collected R38 billion more than the revised R1.2 trillion revenue estimate.
Economic indicators were favouring better than expected growth, however, the inability of power generator Eskom to keep the lights on have dampened spirits ahead of the mini budget.
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The aftermath of Covid-19 restrictions and the destructive July unrest in KwaZulu-Natal and parts of Gauteng is still felt in the economy, despite some relief measures such as payment deferments totalling less than R40 billion.
Collections
The taxman’s compliance drive ensured debt collections from large businesses (R12 billion), high wealth individuals (R42 billion), and “corporate actions” (R6.8 billion).
Sars’s Voluntary Disclosure Programme yielded additional revenue of R4.6 billion, outstanding returns (R5.4 billion) and targeted criminal investigations and preservation orders of less than R2 billion.
According to Kieswetter there is still room for improved compliance across all tax types.
Compliance levels of tax products such as employee taxes (PAYE) and company taxes (CIT) remain a concern.
“Sars has embarked on focused programmes to address this trend,” Kieswetter said.
Read: Sars behaving badly: Revenue service exercised ‘unreasonable discretion’ in disallowing penalty
It has also recovered around R147 million from personal protective equipment fraud. The revenue authority has had a good success rate in terms of prosecutions through collaboration with the National Prosecuting Authority.
Although Sars paid out refunds to the tune of R300 billion, it prevented “refund leakage” of almost R46 billion. It also saved the fiscus R4.3 billion by reducing refunds.
Tax base
Sars has previously remarked on the 26 000 unregistered taxpayers who have financial assets valued at more than R1 million and should certainly be contributing to the tax net.
In a statement Kieswetter said the tax base has been broadened with 1.6 million taxpayers. This resulted in R4.6 billion additional tax revenue during the year under review.
Read: 5.8% of the population is paying about 92% of all personal tax
Sars did not elaborate as to where these taxpayers come from or whether they include deviant politicians or tenderpreneurs.
The broadening of the tax base includes all segments of taxpayers such as new businesses, the revenue collector said when asked who the additional taxpayers are.
However, Sars said its information does not have a category of taxpayers in terms of ‘deviant politicians’ and then supposedly also not for tenderpreneurs.
Kieswetter said Sars will be investing 3% of its budgeted resources in its modernisation programme in order to remain abreast in a “fast changing technology space”.
COMMENTS 4
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Every taxpayer in SA has the moral obligation to pay as little tax as legally (<- note) possible.
In essence, our government is little more that an organised crime syndicate.
SARS is its brutal enforcement arm.
Our tax laws are draconian and deeply unjust, and getting more so every day.
Only two things we can do about it: (i) stop earning an income – i.e. retire as soon as you possibly can, or (ii) become resident outside SA – which does not mean that you necessarily have to emigrate.
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It doesn’t help much if they are collecting more by simply refusing to pay valid VAT refunds, as has been happening since the beginning of the year. Would like to see in a year or 2 how much money they’re spending on legal challenges and ultimately how much more they collect, since they’re currently squeezing people who are quite willing to pay beyond what is reasonable for short-term gain, resulting in those people and companies increasingly moving everything offshore that they can.
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The taxpayer finds himself in this predicament where the law forces him to finance a criminal enterprise when they use corruption, nepotism, cadre deployment, preferred contracts, loaded tenders, inflated wages for government employees, and social grants buy support from the community.
The taxpayer is forced to finance his competition, the party that destroys the viability of his business and destroys his employment opportunity. SARS is the vehicle of extortion that forces us to finance our enemy.
“No society can exist unless the laws are respected to a cer-
tain degree, but the safest way to make them respected is
to make them respectable. When law and morality are in
contradiction to each other, the citizen finds himself in
the cruel alternative of either losing his moral sense, or of
losing his respect for the law—two evils of equal magni-
tude, between which it would be difficult to choose.”
― Frédéric Bastiat, The Law
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I know what my choice is. Respect for the law has long been gone. I only live per natural laws.
Robert A Heinlein said:
“I am free, no matter what rules surround me. If I find them tolerable, I tolerate them; if I find them too obnoxious, I break them. I am free because I know that I alone am morally responsible for everything I do.”
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