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Sars boss explains why more revenue won't come from hiking taxes

27 February 2020 8:44 AM
Tags:
SARS
Tax
income tax
#Budget2020
Sars Commissioner Edward Kieswetter discusses #Budget2020 changes to our tax system.

Refilwe Moloto speaks to Sars Commissioner Edward Kieswetter about just what the changes to our tax system announced by Tito Mboweni mean for South Africans.

The good news for South Africans was the announcement on Wednesday of changes to personal income tax brackets which will result in individual taxpayers paying around R2 billion less in income tax.

Kieswetter says this decision is key.

To just hike a tax tox policy or tax rates is quite an easy thing to do and I guess every finance minister would consider that, particularly when you have a poorly performing economy and expenditure that remains stubbornly high.

Edward Kieswetter, Sars Commissioner

He says the decision, therefore, by the minister together with Treasury not to raise individual tax levels, is based on 3 reasons.

  • Providing individuals with tax relief
  • Building greater public confidence
  • Rebuilding Sars to improve revenue performance

The first factor is, South Africans, especially middle-wage earners, are already struggling and by taking more money out of the economy the unintended consequence is you don't necessarily extract more taxes because people spend less, they incur more debt, and you are in a vicious cycle.

Edward Kieswetter, Sars Commissioner

Tax compliance levels have declined, he acknowledges.

The second factor is the decline in compliance levels...some of that can be attributed to a decline in public confidence in the system. Sars has obviously suffered, but it has also declined because people are struggling.

Edward Kieswetter, Sars Commissioner

The system is struggling, he says, and taxing people more is not a solution.

The third factor that affects tax revenue is the efficiency with which Sars can administer its mandate.

Edward Kieswetter, Sars Commissioner

He adds that during the era state capture, Sars was deliberately weakened and therefore it underperformed.

We say this with cautious optimism, but we have begun the process of stabilising Sars and slowly reintroducing institutional integrity.

Edward Kieswetter, Sars Commissioner

Listen to the interview with Edward Kieswetter below:

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27 February 2020 8:44 AM
Tags:
SARS
Tax
income tax
#Budget2020

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