SA tax revenue has recovered – Carolissen
South Africa’s tax revenue has recovered following the 2008 Global Financial Crisis. This is despite concerns over lagging company income tax.
This is according to Randall Carolissen, South African Revenue Service’s (Sars) head of revenue analysis, who said South Africa’s tax revenue grew by 6.8% between 2008-9 and 2012-13. She was speaking during the release in Parliament of Sars’ sixth annual tax statistics edition today, 21 October.
Carolissen said all the country’s tax types – with the exception of company income tax (CIT) – had rebounded strongly since the country’s 2009 recession.
Though performance in the country’s tax income was still short of the pre-crisis period between 2004-5 and 2007-8 when tax revenue grew by 17.3%, he stressed the decline in tax revenue during the recession (contracting by 4.2% in 2009-10 over 2008-9) was not as dramatic as that of over developing economies. This pointed to the resilience of the country’s tax system, he said.
For the 2012-13 fiscal year, tax revenue collected amounted to R813.8 billion, up R71.2 billion or 9.6% over the previous tax year. however, while personal income tax and VAT contributions recovered relatively well since the 2008 crisis, company income tax (CIT) collections had not yet recovered to pre-crisis levels, due to the contraction in the contribution by the mining sector.
While only 55% of CIT assessments have so far been carried out, projections show that R160.9 billion will be collected for 2012-13 – below the R167.2 billion which was collected in 2008-9.
CIT contributions increased steadily between 1994-5 and 2008-9, making up 26.7% of tax revenue in 2008-9, but have since fallen to an expected 19.8% of tax contributions in 2012-13.
Carolissen said CIT contributions from both the manufacturing and mining sectors declined after the recession because of increased labour costs, higher administrative inflation and production hours lost to labour unrest.
But he stressed that in recent years, Sars had instituted many innovations through its modernisation programme that have helped to limit compliance lapses.
He said the introduction of the 80% rule for all years of assessment after March 1, 2008, which requires all provisional taxpayers with taxable income of more than R1 million to settle at least 80% of their tax liability by the time they make their second provisional payment.
“This amendment to the act ensured that CIT (company income tax) collections are accounted for in the correct reporting period,” said Carolissen, adding that the policy change had helped improve CIT collections in the 2009-10 tax year, and in so doing cushioning the effect of the recession.
Among other things, the latest tax statistics also reveal :
- The number of registered taxpayers grew by 32.5% over 2011/12 to 15.4 million individuals in the 2012/13 tax year, following the requirement in 2010 that all employed people have to be on Sars’s tax register regardless of whether they are liable for income tax or not.
- More than 5.8 million individual taxpayers were liable to submit tax returns in 2012-13.
- The tax-to-GDP ratio increased marginally from 25% in 2011-12 to 25.3% in 2012/13, which is comparable to a number of countries, include Australia, Japan, Turkey, the US, Switzerland and Korea.
- A total of R45.3 billion in tax relief was granted to individuals between 2008-9 and 2012-13.
- The value of tax payments made at branches fell from 21.8% in 2008-9 to 1.8% in 2012-13, with 64.8% of payments in the last financial year done through Sars’s online e-filing system.
A new addition to the tax statistics publication is that of figures for small businesses benefiting from Small Business Corporation (SBC) tax, with the latest statistics revealing that of the 600 526 companies assessed in 2011/12, 103 928 were assessed at SBCs.
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