The number of people registered as taxpayers in South Africa has doubled in the past two years. At a briefing in Pretoria yesterday to mark the launch of the 2012 tax season, Finance Minister Pravin Gordhan said the tax base had grown from 6 million in 2010 to 13.7 million in March this year.
Not all registered taxpayers are liable for income tax because many earn less than the threshold of R63 556 a year. But an indication of the potential take in the 2012/13 fiscal year comes from last year’s figures. According to Oupa Magashula, the commissioner of the SA Revenue Service (Sars), in the tax year to March, 12 million individuals contributed R251.6 billion – 33.8 percent of total revenue collection. The rest came from corporates, VAT and a range of other taxes.
The increase in the tax base, from 1.7 million in 1994, accelerated “following policy changes in 2011 to register all individuals who are formally employed”, Gordhan said. The major boost was achieved with the help of employers who provided Sars with data on their workforces.
Other measures have also improved collections, including recurring monthly penalties, imposed in 2009 for late submission. Magashula said 300 000 people were currently paying administrative penalties, which last year brought in R1.7bn. After due process, penalties can be taken directly from bank accounts or from employers’ wage payouts. Sars has also focused on high-net-worth individuals, a plan that will continue for five years.
About 2 490 people had been identified and would be targeted for auditing and “specific interventions”, Magashula said.
Gordhan said South Africa’s culture of tax compliance contrasted with patterns of tax avoidance in many other countries. These included some of the debt burdened countries of the euro zone that were in danger of defaulting on their debt.
The rapid expansion of South Africa’s tax base is particularly important, given the demands made by a population of 50 million on a comparatively small group of taxpayers, in particularly difficult times.
Gordhan noted that the country had not yet recovered the R60bn in tax foregone in 2009 when the economy was in recession and shed a million jobs. The tax take fell from 28 percent of gross domestic product to 23 percent that year.
“We haven’t recovered; we are only at 25 percent now.”
And he noted, “as government, we have to learn to live within our means” and make sure “we get the best value for our money”.
Referring to abuses that lead to public money being diverted into officials’ pockets, Gordhan said business people were often part of the problem. “On one side of each of these transactions is a business person.”