ECONOMIC WEEK AHEAD: Tax season begins and Absa index expected to remain weak
New Sars commissioner Edward Kieswetter will open the 2019 filing season
The week begins with the opening of the tax season under new SA Revenue Service (Sars) commissioner Edward Kieswetter.
On Monday, Kieswetter will open the 2019 filing season for personal income tax and announce related initiatives that will affect individual taxpayers.
Earlier in 2019 Sars set itself an ambitious revenue target of R1.422-trillion for 2019/2020 despite revenue collection falling short of budget targets over the past five fiscal years.
Kieswetter took up the job of Sars commissioner on May 1 after President Cyril Ramaphosa announced his appointment in March. He succeeded Mark Kingon, a Sars veteran who took over in an acting capacity after Ramaphosa suspended Tom Moyane in 2018.
The 2019/2020 tax season will officially open on August 1 but taxpayers who are registered for eFiling or have access to Sars’s mobile app can file their tax returns from July 1.
The closing date for the tax season will be October 31 for those filing at Sars branches. For taxpayers who use eFiling the deadline is December 4, and for provisional taxpayers who file online the closing date is January 31 2020.
Monday will also see the release of the Absa purchasing managers’ index (PMI), which gauges activity in the manufacturing sector and will provide a clearer indication of how the economy performed in the second quarter of the year.
The monthly changes in factory output measured by Stats SA usually tend to be foreshadowed by the Absa PMI. After rising slightly in April, the index again fell in May, erasing the previous month’s gain and falling to a seven-month low. A score below 50 indicates a contraction in the sector.
The weak economic conditions suggest the reading will remain in contracted territory, said FNB chief economist Mamello Matikinca-Ngwenya.
“Persistently subdued domestic demand conditions and the weakening trend in international trade will continue to constrain actual production,” Investec economist Kamilla Kaplan said.
Figures for vehicle sales, to be released by the National Association of Automobile Manufacturers of SA on Monday, are also expected to have slowed. On a year-on-year basis, new vehicle sales have contracted 4.2% in the year to date.
“Waning household disposable income growth, an increasing reluctance to purchase big-ticket items, subdued domestic demand and lacklustre employment growth provide credence to our view of an apathetic year-on-year reading,” Matikinca-Ngwenya said.
This is reflective of particularly low business and consumer confidence levels and of an environment of weak economic activity, Kaplan said.
On Wednesday the SA Chamber of Commerce and Industry will release its business confidence index. The index declined in May but some optimism remains about Ramaphosa as president since the election in May.