SA REVENUE Service Commissioner Edward Kieswetter says Sars has reported an under-recovery of about R9 billion in overall taxes for April.     African News Agency (ANA)
SA REVENUE Service Commissioner Edward Kieswetter says Sars has reported an under-recovery of about R9 billion in overall taxes for April. African News Agency (ANA)

Ban on cigarette and alcohol sales knocks tax coffers

By Siphelele Dludla Time of article published May 6, 2020

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JOHANNESBURG - The SA Revenue Service (Sars) said yesterday that the ban on the sale of cigarettes and alcohol contributed to the weak revenue collection as the illicit goods industry flourished.

Sars Commissioner Edward Kieswetter said the agency had already received requests for payment deferrals from three taxpayers in respect of alcohol, cigarettes and fuel.

“We are currently investigating non-compliance in instances of alcohol and cigarettes,” he said.

“We have anecdotal evidence that illicit sale of cigarettes and alcohol has continued during the lockdown period - whilst the revenue impact is relatively low as a percentage of total revenue, we raise the criminality thereof as our main concern.”

Kieswetter made the remarks as he painted a gloomy picture of the country’s revenue collection for 2020.

He said corporate taxes and excise duties were also set to be the biggest drags on this year’s dwindling revenue collection, as both declined by more than 50percent due to more companies struggling to survive the coronavirus pandemic and its resultant impact on their operations.

Kieswetter said Sars had already reported an under-recovery of about R9billion in overall taxes for April, representing a year-on-year decline of 8.8percent.

He said that early indications pointed to a downward spiral in all areas, with the exception of electricity, gas and water.

Kieswetter said corporate taxes alone would be down by 55.4percent, compared to 2019, on stagnant business activity.

“We expect that the number of companies who will apply for business rescue will grow over the next year,” he said.

Kieswetter said the main drivers for the under-recovery included a 5.2percent decline in pay-as-you-earn, as more than 65000 employers that had made payments last year made none this year, totalling R3.8bn.

He said that the value-added tax (VAT) was also projected to take a 4.3percent hit as year-on-year monthly payments from vendors who filed their returns decreased by 20percent, with a tax value of R1.1bn.

Kieswetter said VAT refunds would be R15.5bn, 12.5percent lower than estimated for April, as the number of credit returns contracted compared to the corresponding period last year.

He said customs and excise duties were also significantly affected after the country implemented a nationwide lockdown in March.

Kieswetter said import tax was down 19.7percent overall, with import VAT declining 25percent valued at R1.6bn and customs duties down 11.8percent to the tune of R100million.

He said excise duties were significantly down 54.7percent, with a tax value of R1.3bn, and the amount was increased after the inclusion of R400m in fuel levies.  

BUSINESS REPORT 

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