Higher than expected VAT refunds lead to R15bn shortfall

Posted On Wednesday, 20 February 2019 22:08 Published by
Rate this item
(0 votes)

Finance Minister Tito Mboweni says the South African Revenue Service will collect R15.4 billion less than earlier projected.

 TITO-MBOWENI-

Mboweni said this when he tabled his maiden Budget Speech in the National Assembly on Wednesday. 

When he delivered the Medium Term Budget Policy Statement in October, Mboweni said the country was “at a cross-roads”, with revenue collection projected at R1.3 trillion against a spending of R1.5 trillion, which meant at the time that government would spend R215 billion more than it had.

“First, we must look at the President’s task list. Then we must match the resources we have to the plan. In this current year, tax revenue has been revised down by R15.4 billion compared to our October estimate.

“Approximately half of the increase in the shortfall since October is due to higher than expected VAT refunds.

“This lowers revenue collection for the year, but puts money back into the economy,” he said.

SARS is being fixed

Despite the shortfall, Mboweni said the challenges at SARS are being addressed.

“SARS is being fixed. My thanks goes to Judge Nugent and his panel for their wise counsel,” he said.

Judge Nugent and his panel recently made their recommendations for SARS, public.

In response to this, Mboweni said a new Commissioner will be appointed in the coming weeks.

The new Illicit Economy Unit, launched in August 2018, will fight the trade in illicit cigarettes and tobacco. The large business unit is a major source of tax collection. This unit will be reintroduced and will be formally launched in early April 2019.

SARS is strengthening its IT team and its IT systems, and this is crucial for tax collection efforts. Information sharing agreements with allies will help fight cross-border tax evasion schemes, said Mboweni.

The tax gap, which is the difference between revenue collected and what ought to be collected, will also be assessed. There will also be a review of the proliferation of duty free shops inside South Africa.

“Fiscal prudence requires some tax changes. We propose additional revenue measures of R15 billion in 2019/20. There will be a slight upward adjustment of the tax-free threshold for personal income taxes, with no change in the current personal income tax brackets. Together these will raise R12.8 billion,” Mboweni said

Last modified on Wednesday, 20 February 2019 22:15

Most Popular

Exemplar REITail Acquires Katale Square Shopping Centre

Sep 23, 2019
 JASON MCCORMICK
Real estate investment trust, Exemplar REITail, has acquired Katale Square shopping…

Mall of Africa Celebrates Launch of New Generation Pick n Pay Store

Sep 23, 2019
 MOA PNP  1
Today Mall of Africa welcomed one of South Africa's biggest grocery retailers to the…

Grit Real Estate financial results for the year-ended 30 June 2019

Sep 30, 2019
 BRONWNY CORBETT
London Stock Exchange listed Grit, the only listed Africa-focused income distribution…

4AX listed Heartwood Properties reveals positive financial results

Sep 23, 2019
 JOHN WHALL
Commercial property development company, Heartwood Properties , has revealed a 30%…

Reserve Bank keeps repo rate unchanged

Sep 23, 2019
 LESETJA KGANYAGO
 South African Reserve Bank Governor Lesetja Kganyago on Thursday said this is in line…

Please publish modules in offcanvas position.