Revenue collection this year is substantially lower than projected due to the sharp fall in corporate tax collections and higher than expected VAT refund payments.
Compared with the 2023 budget the gross tax revenue estimate for 2023/24 has been revised downwards by R56.8bn to R1,73-trillion, the medium-term budget policy statement (MTBPS) said.
While the 2023 budget projected corporate tax revenue would amount to R336.1bn, Treasury is now projecting it to come in R35.8bn lower at R300.3bn.
VAT revenue is now estimated to be R25.6bn lower at R445,8bn compared with the budget forecast of R471.5bn. VAT refunds are projected to total R353bn in 2023/24.
On the other hand, personal income tax is expected to exceed the budget forecast of R640.3bn by R6.4bn due to the recovery in earnings and higher bonus payments, with employees tax from the finance sector a strong driver of year-to-date growth. Customs duties are estimated to be R3.5bn higher at R77.7bn.
Treasury noted in the MTBPS that a significant factor affecting corporate tax revenue was the fall in profits in the mining sector. “Mining provisional corporate tax collections fell by R24.6bn, or 55.4%, relative to the same period in 2022/23,” Treasury noted.
“Lower commodity prices, weaker global growth, increased incidence of power cuts and logistical constraints have weighed heavily on the sector.
“VAT refunds are R21.5bn higher relative to the same period last year due to stronger than expected exports, increased investments in embedded generation and higher costs of doing business, including the use of more expensive road rather than rail transport. Stronger import VAT collections partially offset robust VAT refund payments.”
The fuel levy is expected to generate R92bn this fiscal year compared with the R90.4bn projected in February.
According to the MTBPS, the tax to GDP ratio is expected to decline to 24.7% in 2023/24 from 25.1% in the previous financial year.
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