Sars commissioner Edward Kieswetter. Picture: FREDDY MAVUNDA
Sars commissioner Edward Kieswetter. Picture: FREDDY MAVUNDA

Sars is projecting an annual revenue loss of about R285bn based on figures for the first month of the lockdown and the impact of sluggish economic activity, commissioner Edward Kieswetter said on Tuesday.

Kieswetter presented the tax authority’s strategic and performance plans to parliament’s two finance committees and gave a breakdown of the devastating effect of the Covid-19 lockdown and the slowdown in economic activity on tax revenue.

PAYE was down in April by 5.2% compared to the same month in 2019, with more than 65,000 employers that made payments last year making none this year, to a tax value of R3.8bn. More than 87,000 employers who made payments last year made payments that were lower to a tax value of R6.1bn.

In terms of domestic VAT, there was a month-on-month decline compared to last year of 4.3%; and a 13% decrease from about 160,000 vendors last year to 139,000 this year. Of the 139,000 vendors only 105,000 paid an amount equivalent to last year. A total of 75% of the vendors contracted in terms of their contribution, “which obviously shows a significant strain in terms of the consumption patterns in the economy”, Kieswetter said.

There was a decline of 19.7% in import taxes, with import VAT down 25% at a tax value of R1.6bn; and customs duty down by 11.8% with a tax value of R100m.

Compared to the same month last year, there was a decrease of 54.7% in excise duty at a tax value of R1.3bn with the decline of R1.7bn on alcohol and cigarettes being offset by a R400m upward correction on the fuel levy.

On corporate taxes, there was a 55% decline in April compared to last year. VAT refunds were 12.5% lower than the estimate primarily due to the number of credit returns submitted by taxpayers.

Kieswetter expressed concern about the significant reduction in economic activity that will not only have short-term implications for tax revenue but, in the longer term, result in the permanent loss of economic capacity as some of the businesses that go under will never come back again with a permanent loss of jobs. He said it probably took about 100 entrepreneurs to create one successful business.

A further big concern was the increase in illicit and criminal activities that were thriving under the lockdown, he said.

Kieswetter estimated that the tax revenue loss from the tax relief measures announced by the National Treasury is likely to be higher than the initially estimated R70bn because of the higher than anticipated applications for payment deferrals, which is likely to be significantly higher than the estimate R5bn.

Correction: May 5 2020
An earlier version of this story incorrectly stated that Sars suffered a revenue loss of about R285bn, when in fact it projected an annual revenue loss of R285bn. 

ensorl@businesslive.co.za