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The scourge of the Covid-19 pandemic came at a time when the SA Revenue Service (Sars) was trying to lift itself from the ashes of the state capture, and the tax collector warned of a huge revenue risk with a levy less than R285 billion.
Detailing the impact of Covid-19 on revenue performance on Tuesday, Sars Commissioner Edward Kieswetter said revenue performance would be less than 15% to 20% lower than the February budget announcement.
“It means that we could face an under-recovery of income of up to R285 billion. My job is not to review the income estimate. That’s what the finance minister [Tito Mboweni] it will when it announces a budget update. Our job is the internal mobilization of resources, so we point this out as a great income risk, ”he said.
Kieswetter said that based on the preliminary assessment of revenue performance, Sars had a slow recovery in the first month of R9 billion, which he said represented a year-over-year decrease of 8.8%.
The commissioner said the main drivers of this decline in revenue collection were Pay As You Earn, which, he said, was down 5.2% compared to the same period last year.
He regretted that more than 60,000 employers who made payments in April 2019 did not make the payments for the corresponding month of this year, which, according to him, represented losses worth R3.8 billion in taxes.
Kieswetter said that more than 87,000 employers who had made payments in April 2019 have made lower payments in the corresponding month of 2020, with a tax value of R6.1 billion.
He said that import taxes were reduced by 19.9%, excise duties, including on alcohol and cigarettes, were reduced by 54% for the sum of R1.3 billion in tax losses.
The extent of the overall state of economic collapse has not been seen since the Great Depression, the commissioner said.
However, he said his main concern was not a downward trend in economic activity, but rather the loss in the capacity of economic activity that, he said, was the result of business closings and job losses.
“Many of these companies and jobs will not return. The full impact of this will come out in the coming months, but it will also depend on how we handle the blockade and economic activities in stages, ”he said.
Kieswetter said the other major concern was the rate at which non-compliance fueled illicit trade and that this was particularly concerning in an environment where they struggled to raise revenue.
When he took office as commissioner a year ago, Kieswetter inherited a critical but hollow institution that had suffered a massive collapse in government, damage to reputation and integrity, and had lost public confidence and morale.
He said his job over the past year was to establish credible systems and management to gain public trust and encourage voluntary compliance.
The agency has admitted in the past that the damage to tax collection would persist for years to come.
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