Hit and miss: SARS falls short on target despite increase in tax collections

The South African Revenue Service (Sars) announced on Wednesday 1 April that it collected an amount of R1.356 trillion in the 2019/2020 financial year that ended on 31 March.

SARS collected R1.356 trillion against the 2019 budget estimate of R1.42 trillion, resulting in a deficit of R66.2 billion (4.7% lower than the estimate). 

The gap is narrowed when compared against the revised 2020 budget estimate of R1.359 billion recording only a 0.2% deficit or R3.1 billion less.

SARS: Increase of tax revenue collections

In total, SARS collected a gross amount of R1.647 trillion which was offset by refunds of R291.9 billion, resulting in net collections of R1.356 trillion, representing a growth of R68.2 billion — a 5.3% increase from the 2018/2019 financial year.

So although SARS missed their budget estimate or target, so to speak, it still collected more revenue than in the previous financial year. 

“These are preliminary results which will be subject to detailed financial reconciliation and a final audit,” the statement read. 

Main sources of revenue 

The statement said the main sources of revenue that contributed to the R1.356 trillion collection, are as follows: 

• Personal Income Tax (PIT) contributed R528.9 billion (39%);
• Value-Added Tax (VAT) contributed R346.6 billion (25.6%); 
• Company Income Tax (CIT) contributed R214.7 billion (15.8%); and  
• Customs duties contributed 55.4 billion (4.1%).

The relative contribution of the main taxes to total tax revenue has shifted with an ever-increasing dependence on personal income tax revenue mainly due to tax policy changes. 

“PIT remains the largest contributor to total tax revenue and its contribution has increased to 39.0% in 2019/2020 from 38.4% the prior year, mainly due to partial fiscal drag relief,” it said. 

SARS said the contribution of VAT and import duties continue to decrease mainly due to weak economic growth with lower consumer and investment spending in the economy.

“CIT’s contribution to total revenue has been declining over the past years, decreasing to 15.8% in 2019/2020 due to low business profits and weak economic growth,” it added. 

AI to make dodging taxes harder 

SARS commissioner Edward Kieswetter said it will deploy a high-tech new system utilising artificial intelligence (AI) running on supercomputers to make dodging taxes harder and more costly to pull off — this according to Radio 702. 

“We have enormous islands of data that we can impose artificial intelligence on to help us enforce compliance. There are more than R100 billion that should be collected that’s floating out there, it’s criminal,” said Kieswetter. 

“We lost about R60 billion as a result of the declining economy,” he added.