The week will start with a bang when the SA Revenue Service (Sars) and Treasury announce the preliminary tax collected for the 2022/23 financial year on Monday.
According to Treasury’s 2023 Budget Review published last month, collections are expected to exceed the 2022 budget by about R93.7bn and come in about R10.3bn higher than the medium-term budget policy statement as higher commodity prices boosted mining tax revenue.
This revenue accounts for almost 30% of provisional corporate tax collections in 2022/23, much higher than its average share before 2020/21.
“Though the extended period of elevated prices has led to revenue surpluses over the last two years, these are expected to be temporary and the current tax revenue outlook assumes that these prices will gradually decline,” Treasury said in March.
Sars commissioner Edward Kieswetter will present the latest numbers at a media conference with finance minister Enoch Godongwana in attendance.
The government will welcome every penny it gets, but a tax overrun does not mean it will solve SA’s problems, as economist Roelof Botha pointed out recently in the latest Afrimat construction index in relation to the local building and construction sectors.
Dysfunctional local municipalities, often bankrupt or insolvent, seem unable to spend the money assigned to maintaining or upgrading public infrastructure, such as roads, as they are plagued by maladministration and corruption, incompetent and unqualified staff, and cadre deployment.
Botha told Business Day that failing municipalities also affect individuals and companies which struggle to get approval for construction projects from incompetent public officials.
In other news, Absa’s purchasing managers’ index (PMI), measured by the Bureau for Economic Research in partnership with the bank, for February will also be published on Monday.
The index, which provides insight into the manufacturing and services sectors, fell from 53 in January to 48.8 in February partly because of power outages.
Investec is forecasting a slight uptick to 49.2. The bank’s economist Lara Hodes said the slump in domestic activity and new orders can likely be attributed to “lacklustre local demand, with confidence and investment potential dragged down by the country’s challenges, notably the severe electricity crisis”.
This was echoed by FNB’s economists who said: “Despite improved global dynamics supporting export sales, the PMI results suggested that worsening domestic electricity shortages are having a more pronounced affect on the manufacturing sector.”
On Monday the National Association of Automobile Manufacturers of SA will publish the latest vehicle sales data. New vehicle sales improved 2.6% from a year earlier in February as the motor industry sold 45,352 cars and commercial vehicles compared to 44,224 in February 2022.
At the end of March, the aggregate sales for 2023 stood at 89,434 units, 4.3% higher than the first two months of 2022.
Vehicle sales are an important economic indicator because they reflect consumer confidence as buying big-ticket items is a luxury consumers would not undertake if they were wary.
“However, a weaker exchange rate and rising new vehicles inflation, a more cumbersome cost of borrowing, as well as the broader economic weakness, should weigh heavily on vehicle sales,” FNB economists said .
On Wednesday the JPMorgan Global Composite PMI, compiled by S&P Global, for SA for March, will be released.
This index — which tracks business trends across the private sector, including mining, manufacturing, services, construction and retail — fell to a 13-month low of 48.7 in January, but returned to growth territory in February at 50.5. Trading Economics is forecasting a 50.6 reading for March.
Readings above 50 indicate growth in activity and those below the midpoint imply a contraction. The index comprises variables such as new orders, output, employment, supplier delivery times, inventories and prices.
“Firms often noted that load-shedding and weak economic conditions had continued to harm sales. On the positive side, firms benefited from a solid increase in new export orders, which was the strongest since December 2011,” S&P Global said in March.
On Thursday Stats SA will publish the electricity generated and available for February. Electricity generated fell 8% and consumption 7.3% year on year in January.
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