Budget 2023
Share

Analysts say tax collections may again undershoot target

accreditation

Low economic growth will likely have a negative effect on the amount of tax revenue that can be collected, analysts have warned.

National Treasury set a target for the South African Revenue Service to collect R1.345 trn, but there are doubts that this is achievable.

Speaking at a panel discussion ahead of the mini budget, Mazars national head of tax Mike Teuchert said that tax collections would depend on the level of economic growth.

"If the economy trudges well, we will be in a position where we can reach targets," he said.

Momentum Investments Sanisha Packirisamy said in a report on mini budget expectations that lower-than-expected growth signalled a possibility that Treasury could undershoot collection targets.

SA has entered into a technical recession, following two consecutive quarters of negative growth during the first half of the year. As a result, the market consensus growth rate projections have been revised downwards, she explained.

Packirisamy cited the International Monetary Fund's GDP growth estimates for SA, which have declined from 1.5% as at July 2018 to 0.8% in October 2018. The IMF also revised down projections for 2019 growth from 1.7% to 1.4%.

The SA Reserve Bank also cut down its growth projection from 1.7% to 0.7% at its last Monetary policy Meeting in September.

Momentum Investments expects the economy to grow by less than a percent, at 0.8%. Momentum also expects Treasury to revise down its forecast from the 1.5% it projected in February.

"An expected downgrade to Treasury's growth projection for 2018 and 2019 implies its February 2018 tax targets are likely to be missed," Packirisamy said.

However FNB Chief Economist Mamello Matikinca said that the year-to-date numbers for August that the revenue collection for the 2018/19 fiscal year are up at 11.2%, compared to the budget review target of 10.5%.

Treasury has collected 36.6% of this year's projection - it is in line with historical collection levels over the past several years, said Matikinca. "What is important to note, however, is that this is the first year where VAT has been increased, and which should have put collection rates slightly ahead of previous years’."

Matikinca said that VAT collections are up 19.5% for the year-to-date compared to the full-year target of 16.4%.

Finance Minister Tito Mboweni will deliver the mini budget in Parliament on Wednesday, October 24. 

* Visit Fin24's 2018 mini budget hub for all the news, views and analysis.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.94
-0.1%
Rand - Pound
23.91
-0.0%
Rand - Euro
20.41
+0.1%
Rand - Aus dollar
12.33
+0.1%
Rand - Yen
0.13
-0.0%
Platinum
908.05
+1.2%
Palladium
1,014.94
+1.3%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders