South African tax revenue ‘buoyant’

2 April 2014

The South African Revenue Service (Sars) collected R899.7-billion in taxes for 2013/14, R0.7-billion more than the revised estimate of R895-billion in the 2014 Budget.

Releasing the revenue service’s preliminary tax collection results in Pretoria on Tuesday, Finance Minister Pravin Gordhan said that despite the global economic turmoil which had tested the country’s finances, tax collection remained buoyant.

“The strength of our government finances is well illustrated by our past performance, including what we are announcing today. We have proven our ability to take tough decisions to promote service delivery while safe-guarding fiscal sustainability.”

Gordhan attributed the strong results to an increase in personal income tax and corporate income tax collections compared to the previous fiscal year.

Personal income tax collections were R310.5-billion, which was R778-million (0.3%) above the revised estimate in the 2014 Budget of R309.7-billion and 12.2% higher than the R276.7-billion outcome of the previous year.

Corporate tax collections went up to R179.9-billion, 0.7% above the revised estimate of R178.7-billion in the 2014 Budget.

“The depreciation of the rand – losing 17.5% of its value against the US dollar in 2013 – improved trade-related taxes and corporate income tax of companies with offshore earnings,” Gordhan said, adding that the slow recovery of corporate income tax following the 2008-09 financial crisis had accelerated this year thanks to higher export earnings

Other factors driving revenue included a growth in the mining and manufacturing sectors in the 4th quarter of 2013, above-inflation wage settlements sustaining personal income tax, and strong imports advancing customs revenue.

Value-added tax (VAT) collection, however, recorded a decrease. VAT collections were R237.7-billion, R1.6-billion lower than the revised estimate of R239.3-billion in the 2014 Budget.

Gordhan said that Sars would continue to build on the progress of the past 20 years to improve tax compliance levels.

“Over two decades, South Africa has built a progressive tax system. Our tax policy framework has proven to be resilient during the global economic turmoil that has tested South Africa’s public finances, its economic policy framework and its regulatory environment over the past five year.

“The revenue authority was transformed and the tax base was broadened. We are leaving the next administration with a solid foundation – a resilient revenue collection system and an effective approach to expenditure management.”

SAinfo reporter and SAnews.gov.za