The South African Revenue Service (SARS) has welcomed Minister of Finance Tito Mboweni’s 2021 Budget Review presentation in Parliament on Wednesday.
The Minister says tax revenue is R270 billion less than the actual tax revenue received as stated in 2020 Budget Speech. He adds that gross tax revenue for 2020/21 is R213.2 billion below projections.
“At the time of the 2020 MTBPS, this shortfall was projected at R312.8 billion. The upward revision reflects improvements in personal and corporate income taxes, value-added tax, fuel levies and customs duties.”
Tax Revenue Contributions
- Personal income tax…………………… ..R516.0 billion
- VAT ………………………………………………. R370.2 billion
- Corporate income tax…………………….R213.1 billion
- Customs and excise duties……………. R100.5 billion
- Fuel levies……………………………………… R83.1 billion
- Other……………………………………………… R82.2 billion
Revenue collection
In a statement, SARS has noted the challenges the country was facing which “had a devastating impact on tax revenue collection due to the economic collapse far greater than that of the 2008 financial crisis.”
Issues such as unemployment and the ongoing COVID-19 pandemic have had a negative impact on the economy and added to the challenge of drafting a budget.
“Key risks to economic growth and revenue remain the effect of the COVID-19 pandemic. This has precipitated job losses together with retrenchments, low consumption demand, strained company profitability following hard the lockdown and uncertain global demand,” read the statement in part.
However, there have been a few positives despite the challenges. SARS says the revenue collections have been trending well above the targets set out in the October 2020 Medium Term Budget Policy Statement (MTBPS).
“As a result of the recovery in consumption and wages between October and December 2020, and a boost to CIT receipts from the mining sector, 2020/21 revenue collections are expected to be R99.6 billion above the 2020 MTBPS estimate.”
Below is statement released by SARS
VIDEO: Budget 2021 delivered by Minister of Finance Tito Mboweni
During his speech, Mboweni says government will not introduce any tax increases this year mainly due to a higher tax collection estimate of nearly R100 billion from the previous financial year.
Mboweni says due to the expected improvement in tax revenue collections, the government will further withdraw previously announced taxes of up to R40 billion which were announced in the previous Budget.
This year’s revenue shortfall has been revised down to R213 billion compared to R312 billion projected in last year’s Budget.
“We must advise this House that we now expect to collect R1.21 trillion in taxes during 2020/21, which is about R213 billion less than our 2020 budget expectations. This is the largest tax shortfall on record. In 2021/22 government expects to collect R1.37 trillion, provided our underlying assumptions on the performance of the economy and tax base hold.”
