SA has lost more in tax revenue since the lockdown began than the loans it got from two multilateral development agencies.
SARS Commissioner, Edward Kieswetter, says there was a need to raise R40 billion more in the February budget but that gap has widened significantly because of Covid-19.
Tax Relief measures and the ban of tobacco products and alcohol sales have led to an under-recovery of about R47 billion in tax collections.
South Africa lost more in tax revenue in the first three-and-half months of its fiscal year than it borrowed from the International Monetary Fund and the African Development Bank (AfDB) combined.
In the three months through June, there was an under-recovery of about R47 billion, with excise-duty collections including levies on alcohol, tobacco products and fuel contracting 42% from a year earlier.
"The reality is that there was a need in February to raise R40 billion more," said Kieswetter. "Right now, that need is significantly bigger than R40 billion because of the coronavirus."
While some restrictions have since been eased, many businesses have closed and the 30.1% unemployment rate is set to worsen, further weighing on tax collections. In a supplementary budget in June, the government cut its revenue projection for this fiscal year by more than R300 billion.
South Africa’s top income-tax rate is 45%, corporate tax is 28% and VAT is 15%. It has little room to raise levies with the ratio of tax revenue to GDP at 26%, compared with a global average of 15%, according to World Bank data.
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