SA's R182bn revenue 'windfall' driven by Sars compliance efforts - Kieswetter

The Money Show interviews Edward Kieswetter, Commissioner of the SA Revenue Service, after the 2022 Budget Speech.

Unexpectedly high tax revenue collections have given South Africa's 2022 Budget a much-needed boost.

Finance Minister Enoch Godongwana delivered his maiden Budget Speech on Wednesday.

The revenue collection overrun effectively amounts to R182 billion.

"We now estimate tax revenue for 2021/22 to be R1.55 trillion. This is R62 billion higher than our estimates from four months ago, and R182 billion higher than our estimates from last year’s Budget."

Godongwana cautioned that "one swallow does not a summer make".

The improved revenue performance is not a reflection of an improvement in the capacity of our economy. As such, we cannot plan permanent expenditure on the basis of short-term increases in commodity prices.
Enoch Godongwana, Minister of Finance

Bruce Whitfield interviews Edward Kieswetter, Commissioner of the South African Revenue Service (Sars).

FILE: South African Revenue Service (Sars) Commissioner Edward Kieswetter. Picture: @sarstax/Twitter.

The collection revenue bonus is often attributed to the mining sector's contribution thanks to the boom in commodity prices.

Kieswetter notes that it is not the entire R182 billion that is a windfall - about a third of the surplus is from the economy he says.

The mining sector had an increase of about 60%; manufacturing about 30%; and then some contributions from wholesale, retail and also communications and logistics...
Edward Kieswetter, Commissioner - Sars

... but the biggest portion of the increase is efforts by Sars to administer its laws to improve compliance. We've seen an improvement in compliance, overall, from 62% to almost 65%.
Edward Kieswetter, Commissioner - Sars

This year we're reporting a compliance effort of R144 billion and that's an 18% increase of compliance revenue from last year.
Edward Kieswetter, Commissioner - Sars

Commenting on concerns about the country's shrinking tax base, Kieswetter says it's a case of "swings and roundabouts".

While there has been a contraction in the number of employed people, there has been a jump in the wage bill at the same time.

Across the tax base we've increased the register by 1.47 million taxpayers. Just in the current year, that has contributed R3.6 billion of additional taxes.
Edward Kieswetter, Commissioner - Sars

The real issue says Kieswetter, is the levels of compliance by taxpayers.

He uses value-added tax (VAT) returns as an example.

In the year to date we have received just short of 3.5 million VAT returns. Of those, over 650,000 returns are asking for refunds.
Edward Kieswetter, Commissioner - Sars

Kieswetter says while many applicants are frustrated by the waiting period as Sars goes through the necessary verification process, this process is justified.

Of the R266 billion that is claimed we have really only paid out R212 billion and have prevented, through the work we do, R30 billion in taxes flowing out.
Edward Kieswetter, Commissioner - Sars

Every single call we drop, every 21-day turnaround that we miss, keeps me awake at night... There is a risk between the trade-off to Sars and the service, but over time hopefully as we improve our systems we will improve our service.
Edward Kieswetter, Commissioner - Sars

Listen to the Sars Commissioner's insights on The Money Show: