Covid-19: SA will need R3.4trn to recover
The South African economy will require funding of an estimated R3.4 trillion in the next three years, excluding off-balance-sheet infrastructure projects, says Martin Kingston, executive chair of Business for SA.
The under-collection of tax revenue because of the sharp contraction of the economy in response to the stringent Covid-19 lockdown regulations may well be worse than the R300 billion touted in June. Tax collections were down 20% in August compared to the same time last year.
Sars Commissioner Edward Kieswetter said in his opening address at the virtual Tax Indaba on Monday that the revenue service was able to collect R460 billion compared to last year’s R519 billion in the same time.
He said the under-collection is not only linked to the lack of economic activity, but also to the current level of tax compliance.
South Africa’s frustration
“I do understand the frustration many South Africans have when they witness inefficiency, waste and corruption in the country. I understand that many feel morally justified to fiddle with their taxes. But when we do, we hurt the vulnerable and poorest in society.”
Kieswetter referred to the corruption investigations into irregularities regarding the procurement of personal protective equipment (PPE), where 63% of the companies who were awarded tenders were found to be ‘tax uncompliant’, and 22 of the companies were linked to “politically exposed individuals”.
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