South Africa’s tax base is shrinking
New data from SARS shows that South Africa faces an uphill battle when it comes to revenue collection – even before the impact of the coronavirus pandemic is factored in.
In a parliamentary presentation on Tuesday (6 October), SARS commissioner Edward Kieswetter said that a number of factors have begun to manifest in measurably weaker economic activities during the 2019/20 financial year, especially in sectors such as manufacturing and financial services.
The 2019/20 financial year ended 31 March 2020 – before the Covid-19 pandemic and lockdown had fully taken root in the economy.
The factors identified by the SARS head include:
- Poor economic conditions;
- High public debt;
- Underperforming SOEs;
- Unreliable electricity supply; and
- Lower business confidence.
By Q4 2019, a contraction in real GDP of 0.4%, 2.9% and 1% was recorded respectively in the primary, secondary and tertiary sectors. This worsened to -11.8%, -7.5% and 1.3% respectively in Q1 2020.
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