South Africa’s tax bonanza

4 April 2008

Finance Minister Trevor Manuel praised the growing strength of the partnership between the South African Revenue Service (Sars), businesses, and individual taxpayers, following the announcement of the state’s preliminary revenue results.

“It gives me great pleasure to announce that Sars collected a preliminary R571.8-billion during the fiscal year 2007/08,” he said this week, speaking via satellite linkup from Addis Ababa, Ethiopia.

“I am extremely appreciative of the tremendous cooperation by many businesses, larger corporations and smaller enterprises, and individuals.”

Manuel was in Ethiopia attending the United Nations Economic Commission for Africa.

The preliminary result, he said, was R0.8-billion above the revised budget estimate made in February 2008, and R15.2-billion above February last years estimate of R556.6-billion.

Taking into account additional departmental revenue of R1.4-billion and deducting transfers to South African Customs Union partners, the preliminary main budget revenue estimate is R560.1-billion.

“Our preliminary estimate of national expenditure is R541.6-billion, bringing the main budget surplus to R18.5-billion or 0.9% of gross domestic product (GDP), which is 0.1% higher than the February 2008 estimate,” he said.

Manuel said the results confirmed the continuing expansion of South Africa’s economy and growing strength of the partnership between Sars and taxpayers.

The revised corporate income tax (CIT) target of R142.6-billion was exceeded by R448-million, with all sectors posting a positive tax growth.

This was led by manufacturing, with 22% year-on-year growth, followed by mining with 12%, financial services with 11%, and the wholesale and retail sector with 10%, banks with 8% and the insurance industry with 7%.

Personal income tax (PIT) was marginally higher despite higher interest rates and rising fuel food and fuel costs as a result of considerably higher wage settlements, singling out the public sector wage settlement in particular.

“The growth in employee compensation from 10.6% in 2006 to 11.7% in 2007 and the increase in the number of jobs resulted in the strong growth of PIT,” said Manuel.

Despite a slowdown in household spending the revised Value Added Tax (VAT) target of R147-billion was also exceeded by R2.6-billion, being benefited by inflation and a change in consumers’ spending patterns.

“Our preliminary figures indicate that there has been a shift in the composition of VAT receipts,” Manuel said. “In the year under review, import VAT, including tax on equipment and producer goods contributed R1.1-billion more to VAT collection whereas domestic VAT contributed R2.7-billion less than estimated.”

Source: BuaNews