Pay as you earn income tax growth rate has slowed down in 2017 due to low business confidence and the impact of a technical recession experienced in this year. This emerged during the release of the National Treasury and the South African Revenue Service (Sars) 10th annual edition of the Tax Statistics report in Pretoria on Tuesday.
The report shows an overview of tax revenue collections since the 2012 tax year until now. The tax growth rate for 2017 has decreased to 6% from 6,9% last year.
Sars says the impact of a technical recession, low business confidence and fewer bonuses contributed to this.
Revenue collected from import taxes, import VAT and custom duties also declined by 1,0% and 1,5%, respectively.
“While business confidence remains low, businesses are not hiring people. Pay as you earn used to grow by 12%. Now, it’s growing at 8% and the slow consumer confidence … they now prefer to buy food and clothes only,” says Head of Research at Sars Randall Carolissen.
However, Sars says the total tax collection for 2017 reached over R1.2 trillion despite the difficulties it faced.
The total revenue collected over the last 10 years amounted to R8.3 trillion.
The report also highlighted that corporate income tax had been the third largest contributor to total tax revenue for the past decade.
“To collect over R1.2 trillion with all the difficulties we faced shows the resilience of our staff.”
There are currently about 20 million registered taxpayers. This is because Sars now requires all employers to register their employees even though they fall below the tax threshold and are exempt from paying tax.
With the GDP number having increased to 2% in the third quarter of this year, Sars expects a slight improvement in consumption and an improved business confidence in the near future.