South Africa can expect to undershoot the tax collection target set out in 2018 by ‘around R50bn’.
This is one of the conclusions of a preview analysis of the medium-term budget policy statement by Momentum Investments.
Noting projected growth in the personal income tax take of some 12.5%, it said to date it had grown by roughly half of this, at 6.9%. This was well below the average for this period over the preceding five years. In addition, revenue from taxes on business and from VAT was also not coming in as had been hoped.
The report commented: ‘Tax shortfalls have occurred in spite of the implementation of additional tax hikes, including the 1% VAT increase and an increase in taxes for the top tax bracket. There is a growing concern that the country has approached its limit on advancing tax revenue collections through further tax increases for taxpayers.’
This echoes concerns previously expressed by executives at the South African Revenue Service (SARS), and by cabinet ministers. In July, finance minister Tito Mboweni remarked that tax revenue in 2019/20 stood to be ‘significantly lower’ than expected. This would likely increase the country’s borrowing requirements.
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