Tax revenue collected to end-September was 2% higher (R18bn) than the estimate for the first six months of the fiscal year, SA Revenue Service (Sars) commissioner Edward Kieswetter told MPs on Tuesday.
The estimate for this period was R907bn, and the net amount collected was R925bn.
Contributing to this increase were withdrawals of R18bn from the two-pot retirement system in the year to date, which had generated an additional R6bn for the fiscus, Kieswetter said in a briefing to parliament’s finance committee on the tax authority’s 2024/25 annual report.
The higher-than-estimated tax collection so far is good news for the medium-term budget policy statement (MTBPS), which finance minister Enoch Godongwana will table in parliament on November 12.
The minister told the committee he would table the MTBPS in cabinet on Wednesday and was due to discuss it with President Cyril Ramaphosa (who is in Switzerland) on Tuesday afternoon.
Two-pot retirement withdrawals
Kieswetter told MPs that year-on-year growth in tax revenue to end-September was 9.3% (R79bn), explaining to Business Day that this was largely due to domestic VAT returns, corporate provisional tax payments and PAYE (including two-pot taxes). Voluntary compliance had increased by 0.7%.
About R6bn had been generated so far from the debt recovery project, with additional revenue coming from the clawback on refunds due to risk identification and an overall improvement in tax compliance due to ongoing Sars efforts.
More information would be provided in the MTBPS, the commissioner said.
The R18bn in two-pot withdrawals so far this year is in addition to the approximately R57bn withdrawn between September 1 2024, when the system came into effect, and the end of March. This generated about R13bn in additional tax revenue.
Kieswetter told MPs that in the year to date 1.7-million tax directives for two-pot withdrawals had been received by Sars, of which 1.47-million (86%) were approved, 57,000 (3%) were declined mainly because of data issues such as wrong ID numbers, and 190,000 (11%) were declined by fund administrators.
He said more middle-income earners were making two-pot withdrawals and not lower-income earners as expected.
Sars deputy commissioner Johnstone Makhubu said Sars customs and excise interventions to enforce compliance had also delivered returns.
The imposition in August last year of customs duties on imports, particularly of clothing, footwear and leather, which increased from a flat rate of 20% to anything between 40% and 65%, as well as the imposition of VAT on these products, had generated R500m in additional VAT and duties year on year between April and August.
The change was intended to address a tax loophole used by international e-commerce retailers such as Shein and Temu for small packages under R500.
Kieswetter said he was in discussions with Godongwana and Treasury director-general Duncan Pieterse about the funding model for Sars, arguing that it should have its own budget appropriated in a separate vote by parliament instead of being an allocation from the Treasury’s budget.
PIC scrutiny
Godongwana was questioned about the poor performance of the Public Investment Corporation’s (PIC) unlisted investment portfolio of more than R100bn, which has suffered a high level of impairments.
The minister said there had been governance lapses and improper management in the portfolio held by the Isibaye Fund and the property portfolio largely due to improper management. The most glaring lapse had been the investment in collapsed poultry producer Daybreak Foods, in which the PIC has invested R1.7bn.
Another problem had been layers of bureaucratic regulation over the unlisted investment portfolio which had not stopped corruption.
Forensic auditors had been appointed to determine whether any consequence management had been taken arising out of a number of forensic reports, including the findings of the Mpati commission, which investigated allegations of impropriety at the state-owned asset manager.
Proactive measures
Godongwana warned that he had put the new PIC board on terms that it had to address the governance lapses in the unlisted portfolio. Its progress would be evaluated after six months and if no progress had been made the board would be removed.
ActionSA MP Alan Beesley questioned why only one of the 467 recommendations for blacklisting of individuals and companies made by the Special Investigating Unit (SIU) had been implemented by National Treasury.
Pieterse said the Treasury was looking at the possibility under proposed draft public procurement regulations of it taking a more proactive role in this. He noted that the blacklisting process was led by the relevant department or entity, which had to give suppliers an opportunity to make representations and only then submit the request to Treasury.
Vinay Ramballi, a senior audit manager in the auditor-general’s office, told MPs in a briefing on the audit outcomes of National Treasury and its entities that they were on the whole doing well, though the credibility of the financial statements of Land Bank was a cause for concern.
Both Land Bank and the PIC needed to enhance their disciplines with regard to financial reporting and compliance with laws and regulations.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.