During the delivery of the 2019 Budget speech, the Minister – Tito Mboweni – spoke about six fundamental prescripts in this year’s budget, one of them being Increasing tax collection. In increasing tax collection, he talked about Tax revenue and raising SARS’ capacity – the following was addressed on this topic:

In the current year, the tax revenue has been revised down by R15.4 billion compared to the estimate made in October 2018 for the 2018/19 tax year. Approximately half of the increase in the shortfall since October 2018 is due to higher volumes of VAT refunds than expected.

SARS capacity:

SARS’ capacity will be increased thanks to the recommendations provided by Judge Nugent and his panel. The recommendations included:

  • The appointment of a new commissioner in the coming weeks;
  • The introduction of the new Illicit Economy Unit to be formally launched in April 2019, this will fight the illicit trade in cigarettes and tobacco;
  • The large business unit which was a major sources of tax collection and whose skill was renowned, will be reintroduced and formally launched early April;
  • SARS will be strengthening its IT team and its IT systems – this is crucial for tax collection efforts; and
  • Information sharing agreements with allies will help fight against cross-border tax evasion schemes.

The Minister also noted that he instructed Judge Davis to assess the tax gap, i.e. the difference between revenue collected and what ought to be collected. The Judge will also review the proliferation of duty -free shops inside South Africa.

Tax Revenue:

There is a proposal for additional revenue measures of R15 billion in 2019/20, with a slight upward adjustment of the tax-free threshold for personal income taxes and no changes in the current personal income tax bracket. This is expected to raise an additional R12.8 billion in revenue.

Excise duty (sin taxes) on alcohol and tobacco will be increased, with the exception of sorghum beer. Furthermore, Fuel levies will increase by 29 cents per litre for petrol and 30 cents per litre for diesel. According to the Minister the Road Accident Fund levy increase is not enough to match the Fund’s R215 billion liability. He urged the Department of Transport to quickly resubmit the Road Accident Benefit Scheme Bill for Parliament’s urgent consideration – this will help stabilise the fuel prices.

He further mentioned that the National Treasury will work with the Department of Trade and Industry and the Department of Economic Development to explore the introduction of an export tax on scrap metal.

He confirmed that the ordinary taxpayer is fully tax compliant and pays their fair share; and concluded the topic with the slogan “Thuma Mina and Paying your taxes is the right thing to do.”

Author:

Phumla Taho
Tax Consultant