Sam Mpofu

South Africa’s revenue collector rakes in $90bn in 2018/19 financial year

The South African Revenue Services (SARS) has collected a total of R1.28 trillion ($90 billion) during the collection season for the 2018/19 financial year, below the R1.3 trillion targeted in the 2019 budget estimate, according to acting revenue collector, commissioner Mark Kingon.

“The gross amount collected is R1 575.4 billion which was offset by refunds of R287.8 billion, resulting in net collections of R1 287.6 billion. The net revenue outcome of R1 287.6 billion represents a growth of R71.2 billion (5.8 percent) compared to the 2017/18 financial year,” Kingon said on Monday. 

When compared with the 2019 Budget estimate of R1 345 billion, this results in a deficit of R57.4 billion (-4.3 percent), and against the Revised Estimate of R1 302.2 billion, this results in a deficit of R14.6 billion (-1.1 percent), but it is still about six times the total tax collection in Nigeria in 2018 which, though the country’s highest ever, was N5.3 trillion ($14.7 billion).

Kingon said that during the financial year, gross collections grew by 8.6 percent, while refunds recorded 22.7 percent growth after Finance Minister Tito Mboweni announced during the Medium Term Budget Policy Statement (MTBPS) that the VAT refund envelope would be increased to allow the release of VAT refunds back into the economy.

“During the reporting period, global economic growth weakened to 3.7 percent for 2018 and a projected growth of 3.5 percent in 2019. Growth has been hamstrung by US-China trade tensions (and tariff increases) in 2018, the introduction of new automobile fuel emission standards in Germany, the contraction in domestic demand in Italy due to concerns over sovereign and financial risks, as well as weak financial market sentiment and growth in Turkey,” the SARS acting commissioner said.

He noted that the main sources of revenue that contributed to the R1.2 trillion collected were Personal Income Tax (PIT) at R493.8 billion or 38.3 percent of total collection, Value-Added Tax (VAT), contributing R324.6 billion (25.2 percent), Company Income Tax (CIT), R214.7 billion (16.7 percent) and Customs duties, which contributed R55.2 billion (4.3 percent).

The SARS said it expected to see gross collections growing at 8.6 percent as Africa’s most advanced economy continues its recovery from the 2018 recession.

Although tax revenues in most parts of Africa are low when compared with the rest of the world, but the continent has witnessed increased tax revenues over the past two decades, with countries like South Africa leading the line, especially in tax as a ratio of GDP.

With tax revenue the most important and sustainable source of development financing, experts have made the case for governments across the continent to prioritise policies to raise taxation capacity, efficiency in tax collection and leverage technology to expand the tax base.