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Articles: SARS likely to beat collection targets again

Posted by admin on Monday, April 03, 2006 - 07:42 AM

TAX collections are likely to exceed government projections once again, making the 2005-06 financial year a bumper one, say tax analysts and economists.
Sanchia Temkin

The South African Revenue Service (SARS) will release its preliminary financial results for the 2005-06 year today. Efficient Group economist Dawie Roodt said at the weekend the overrun might be as high as R45bn, giving SA its smallest fiscal deficit since the 1980s. Finance Minister Trevor Manuel raised the revenue target from an initial R372bn to R417bn during his budget speech this year. This meant SARS had about six weeks to collect an additional R45bn — a tall order. “The total overrun could be between R40bn and R45bn,” Roodt said. The fiscal deficit is the difference between government’s total expenditure and its total receipts, excluding borrowing. Roodt said collections in per-sonal taxes were expected to have contributed R10bn more than the R116,9bn budgeted for last year. Company tax should be R21bn more than the R68,7bn budgeted for this time last year, Roodt said. Roodt said taxpayers could also expect government to collect more than R7bn more for VAT than the budgeted R106bn. The 2005-06 fiscal deficit narrowed to 0,5% of gross domestic product (GDP), making it the second-lowest in South African history. The lowest was 0,1% of GDP, reached in 1980 during the gold boom. If SARS was under by R1bn, it was unlikely to have a great impact on the deficit, Roodt said. Billy Joubert, a tax partner at Deloitte, said that the receiver would in all likelihood meet its targets. February was usually a good month for SARS as most companies tended to have their financial year end in that month, Joubert said. He said that improved collections in tax in the past several years could be attributed to effective tax collection on the part of SARS. “This had given SARS scope to cut tax rates. Last year there was a reduction in the corporate tax rate from 30% to 29%.” There was also an adjustment to the tax brackets in this year’s budget, with the average adjustment being about 26% across the board, the highest being the top bracket that was adjusted by 33%. Joubert said that the more effective that revenue was in collecting taxes, the more scope there would be for further tax cuts. Charles de Wet, a tax partner at PricewaterhouseCoopers, said SARS was likely to meet its targets. There was more compliance on the part of taxpayers and effective tax collection on the part of SARS, De Wet said. Last year, SARS exceeded original targets of R333,7bn by more than R21bn for the 2004-05 financial year. The receiver collected R354,9bn in revenue, exceeding by R9,6bn its revised target of R345,3bn for that year.

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