South Africa's revenue agency concerned about falling tax compliance
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South Africa's revenue agency concerned about falling tax compliance
New South African bank notes featuring an image of former South African President Nelson Mandela are displayed at an office in Johannesburg
By Mfuneko Toyana

PRETORIA (Reuters) - The South African revenue service (SARS) is concerned about falling tax compliance as some tax payers have stopped paying their taxes over unhappiness with the government, the agency said on Tuesday.

Finance Minister Malusi Gigaba shocked markets in October when he said tax revenue for the 2017/18 financial year was underperforming by 50.8 billion rand ($3.74 billion), the largest under-collection since a 2009 recession, leaving Pretoria with a gaping budget deficit estimate.

In its 2017 release of tax statistics, SARS said of the 6.4 million people expected to submit tax returns only 4.8 million had done so, resulting in a 75 percent achievement rate.

Personal income tax accounts for the largest share of government revenue at 37.2 percent, or 452.9 billion rand, of total tax revenue.

"We have seen a slippage in compliance ...we will be looking specifically at those people who have stopped paying because they are unhappy with government," said the agency's head of revenue research Randall Carolissen.

He did not elaborate on the individuals he said were unhappy.

Some analysts have said South Africa's business and consumer confidence has been dented in recent years by allegations of corruption in government and influence-peddling by the Gupta family - close businessmen friends of President Jacob Zuma.

Zuma and the Gupta family have denied the allegations.

"Rising public concerns about corruption, wastage of public funds and inefficiencies in service delivery are clearly affecting the willingness of South Africans to comply and pay their taxes," said Ian Matthews, an investment analyst at Bravura.

The tax ombudsman in a report in October also raised concerns about the impact on revenue collection of a sharp jump in complaints against SARS.

Falling government revenue risks pushing South African debt deeper into "junk" territory after a downgrade by S&P Global Ratings last month.

S&P, as well as Moody’s which put the country on review for a downgrade, cited weak public finances owing to poor economic growth, expected to be below 2 percent annually in the next three years.

Political and policy uncertainty are also major threats to the country's economic reform and credit ratings.

The ruling African National Congress (ANC) will kick off its conference on Saturday to elect a new party leader to succeed Zuma, who can remain president of the country until 2019.

($1 = 13.5871 rand)

(Editing by James Macharia; Editing by Angus MacSwan)

2017-12-12 15:18:28


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