South African Revenue Service commissioner Edward Kieswetter. File photo: Government Communication and Information System (GCIS)
South African Revenue Service commissioner Edward Kieswetter. File photo: Government Communication and Information System (GCIS)

Sars says over 20 000 people were retrenched in April

By Marvin Charles Time of article published May 6, 2020

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Cape Town - The SA Revenue Service will recover up to R285 billion less in projected taxes this year, because of the Covid-19 pandemic crisis.

Sars commissioner Edward Kieswetter said this amounted to 15%-20% under-recovery on the budget presented in Parliament in February.

“From the preliminary assessment of revenue performance of the first month we can report the under-recovery of around R9bn for April represents a year-on-year decline of 8.8%.

“The main drivers for this under-recovery includes Pay As You Earn (PAYE) which is down on the prior year by 5.2% over 65 219 employers who made payments in April 2019, but no payments in April 2020 (tax value of R3.8bn) and 87 137 employers, who made payments in April 2019 made lower payments in April 2020 (tax value R6.1bn),” Kieswetter said.

He said a major concern that Sars have from a revenue perspective was not only a downward trend of economic activities, but a loss of economic capacity due to businesses closing and job losses.

Kieswetter was speaking at a media briefing on Tuesday where he gave details on the impact of Covid-19 on revenue collection.

“The full impact of this will manifest over the next few months, and also depend on how the government manages the phasing in of economic activities.

“Many businesses will simply not be able to operate profitably at reduced capacity and will fail completely. Those who have started businesses from scratch, will know how hard it is to start a business – it often takes 100 business ventures to start one successfully. The loss of economic capacity in our economy will have long-term tax revenue implications,” he said.

According to a Statistics SA report on liquidations and insolvencies, the number of liquidations increased by 12.3% for February this year from February last year, with an increase in voluntary applications and insolvencies of 13.9% for January this year compared with January in the previous year.

Sars reported an increase of 1 622 employees retrenched last month compared to April last year, an increase of almost 9%. Total retrenchments last month amounted to just over 20 000.

“During this time it remains vital for taxpayers to be compliant. More than ever government needs tax revenue to provide much-needed relief to businesses and individuals, and especially to keep an army of community health workers and other medical and front-line workers employed,” Kieswetter said.

“Many businesses and individuals are desperately in need of refunds that are payable sadly we are still dealing with abuse of the refund system,” he added.

Kieswetter also said the illicit market remained Sars’ main concern.

He said they have observed ongoing illicit trade activities and have effected a number of detentions and seizures last month, which included 43 detentions (everything from cigarettes to masks).

And 17 seizures to the value of R2.6million, mainly cigarettes, alcohol and counterfeit clothing and footwear.

“South Africans who cannot access alcohol and cigarettes through legal channels due to the nationwide lockdown which has prohibited the sale have been using the blackmarket, which tarnishes the economy and drains the fiscus though the tax revenue.

“Sars has revised its expected losses in revenue due to the illicit trade of products,” said Kieswetter.

@MarvinCharles17

[email protected]

Cape Argus

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