Deputy Finance Minister David Masondo says although the South African Revenue Service (SARS) has collected R38 billion more than what was estimated, government’s expenditure is still way above revenue collection.

Masondo added that the good news is that the budget deficit is lower than what was estimated. SARS today briefed the Standing Committee on Finance on its annual performance for the year under review.

Masondo says the slight improvement in the budget deficit does not mean that government must relax in exercising financial discipline. He says the fiscus is still under severe pressure with debt projected to rise to R5.2 trillion in the next two to three years.

He says the solution is to grow the economy.

“There’s some good news here in that the budget deficit is lower than estimated. We had estimated a budget shortfall of R603 billion. This minor improvement in our fiscal situation is very minor and very insignificant and therefore we should not rest because our fiscal situation is still very bad, our debt is still nearly R4 trillion and we are still projecting that the debt will rise to R5.2 trillion in 2023-24 financial year and our revenue shortfall will still be very high.”

The committee also heard that illicit economic activities gained ground last year when the country was on hard lockdown due to the COVID-19 pandemic. SARS Commissioner Edward Kieswetter says while the formal economy was suppressed and some economic activities grounded to a halt, the informal economy did not stop operating.

He says, while there is still a long way to go in fighting illicit economic activities, they have made successful prosecutions.

“From last year we have completed 842 investigations in this area and have finalised it in areas such as fuel, tobacco, alcohol, trading and textile, leisure and footwear specifically on illicit financial flows and tax evasion.”

The Commissioner has also assured the committee that he will never allow interference by third parties at the Revenue Services whether to him or staff members.

“Certainly in my term as the Commissioner of SARS, I have had no political interference from any political parties or any political leaders. I can also give the assurance that I will not tolerate any political interference.  I will resign than comply with any political request.”

Commissioner Edward Kieswetter says SARS’ independence remains intact: 

Meanwhile, Masondo says although the economy is showing slight signs of recovery, it continues to be largely suppressed. He says the additional allocation of R3 billion to SARS for the next three years will go towards strengthening its capacity to collect revenue.