ECONOMIC WEEK AHEAD: Sars revenue figures in the spotlight
Economists will pay close attention to the preliminary figures released by the tax agency, with an expected shortfall of R42.8bn
Economists will pay close attention to the preliminary tax revenue figures released by the SA Revenue Service (Sars) on Monday.
The release will likely be acting commissioner Mark Kingon’s swansong before Edward Kieswetter takes the helm.
Though the revenue agency is targeting R1.3-trillion, the Treasury said in the budget policy review in February it expects Sars revenue figures to show a shortfall of R42.8bn. Revenue collection has fallen short of budget targets over the past four fiscal years, with 2017’s shortfall amounting to R48.2bn.
Economic weakness has reduced personal income tax and corporate income tax receipts in the past year, but administrative weakness in collection was a contributing factor, said the Treasury.
The revenue service has been working to restore its credibility but tax morality continues to remain low. Revenue collection is driven by the state of the economy, fiscal policy and administrative efficiency, but under former Sars commissioner Tom Moyane, who was shrouded in controversy, tax compliance was at low levels last seen during the 2008/2009 financial crisis.
The figures also come as unionised Sars employees continue to strike for an 11.4% salary increase while the revenue service is offering 7%.
Monday will also see the release of the Absa purchasing managers index (PMI), which gauges activity in the manufacturing sector. After falling into contractionary territory in January and February, the PMI will likely remain below the neutral 50-mark in March – a sign the economy remained weak in the first quarter of the year.
“This can be attributed to a combination of weak domestic demand and rotational load-shedding adversely affecting production output,” FNB chief economist Mamello Matikinca-Ngwenya said.
Investec expects the PMI to fall to 45 from 46.2 in February while FNB expects it to rise slightly to 47.
Power cuts have put further pressure on the sector, which saw tepid growth of just 0.3% in January.
Local manufacturing production has also been affected by weaker aggregate demand conditions, Investec economist Kamilla Kaplan said.
New-vehicle sales have remained in the doldrums for the past five years. half-decade. In the last four months new vehicles have registered negative year-on-year growth and the March reading, which will also be released on Monday, is expected to be no different. Sales saw contractions of 7.5% and 6.5% in January and February respectively.
“Consumers will likely continue to hold off on purchases of big-ticket items until economic certainty improves,” Matikinca-Ngwenya said.
According to the fourth-quarter FNB and BER consumer confidence survey released at the beginning of 2019the year, consumers assessed the time to buy durable items as unfavourable, which likely persisted into the first quarter of 2019.
On Wednesday, the IMF International Monetary Fund (IMF)will release the analytical chapters of its world economic outlook. In October 2018, the fund revised down SA’s the growth forecast for 2019 from 1.7% to 1.4% but kept this unchanged in January. The fund will likely provide more insight into the growth prospects over the medium term.