South African Revenue Service (SARS) Commissioner Edward Kieswetter says tax revenues are expected to fall by between 15 and 20% this year, which is about R285 billion. He is attributing the possible shortfall to both the sluggish economy and the coronavirus lockdown.
Kieswetter was addressing Parliament’s joint committee, during a virtual briefing on the revenue service’s strategic plan and annual performance. He says the significant reduction in economic activity and the long term loss of economic capacity as some of the businesses will never be able to reopen are huge concerns.
“It takes probably a 100 businesses with high input ability rate to create one successful business so every business we lost we will have to have a hundred if not more entrepreneurs to take the risk and creating businesses. And the third risk is the increase of the illicit economy and we have clear evidence that the illicit and criminal economies are thriving.”
In the video below, is a discussion on the impact of COVID-19 on emerging farmers and red meat producers:
Late in April, the SARS Commissioner expressed concern over the ban on alcohol and cigarette sales, saying the economy lost R1.5 billion due to it.
Alcohol and cigarette sales were outlawed when the country entered into lockdown in a bid to curb the spread of the coronavirus.
A legal battle is brewing over the government’s about-turn on cigarette sales. This after the National Command Council on COVID-19 reversed a decision to unban tobacco and cigarette sales following public consultation and expert advice.
‘Treasury no longer interest in rescuing defunct SOEs’
Meanwhile, Finance Minister Tito Mboweni says the Treasury is no longer interested in rescuing defunct state-owned enterprises (SOEs).
Replying to a question from the Democratic Alliance, Mboweni would not speak on the specific details of South African Airways (SAA). He hinted, however, that it could follow the example of Switzerland where Swiss Air went bankrupt and was replaced with Swiss International.
In the briefing to Parliament’s joint committees on Finance, Mboweni said however that they are interested in supporting SOEs that are functioning well like Telkom, which actually gives government a dividend. He added that he is biased towards helping state arms manufacturer Denel.
“Denel has the capacity to help in the further transformation of the military-industrial complex, converting some of the military technologies into civilian use. And it’s a very important area of supporting our engineers and so on. But they must get their business case up and running properly.”