The COVID-19 pandemic will cause the South African Revenue Service (SARS) to raise around R250bn less tax this year.
Dr. Cooperative government minister Nkosazana Dlamini-Zuma highlighted this figure on Tuesday as part of a presentation to the National Council of Provinces.
That’s almost four times more than the R66.2-billion deficit the service was able to raise in the 2019-’20 financial year.
However, that’s less than the R285bn deficit predicted by SARS Commissioner Edward Kieswetter in early May.
He said in an online submission that only in April, SARS collected about 8.8% less tax than a year ago. This represents around R9 billion.
The collection of all kinds of taxes has fallen.
These include current employee income tax (PAYE), value-added tax (VAT), excise duty and company tax.
The fall in taxes is because people lose their jobs, or earn less or no salary, companies do not sell as many products and / or services that are subject to VAT, and companies do not make a profit or make a smaller profit.
In addition, the country’s borders are closed, and although there are imports, it is expected to be less than before the state of containment was introduced.
Finance Minister Tito Mboweni is expected to table a revised budget on June 24 where the fall in tax revenue and the state’s larger spending on health care, disaster relief and social grants related to the Covid 19 crisis, among others , will be taken into account.
Moreover, Dlamini-Zuma warns that unemployment in the country could rise to as much as 50%.
Economist Mike Schüssler said at the end of March that the state of restriction could leave millions of jobs in the formal sector.
According to Schüssler, trends in Israel show that the formal sector could lose more than a million or even more than 2 million jobs.