BUDGET
GAVIN KEETON: Poor tax collection adds to spendthrift government’s woes
Evidence presented to the Nugent commission has revealed worrying changes at the SA Revenue Service that appear to have undermined its ability to collect taxes. This contributed in recent years to significant shortfalls in taxes collected compared to what was budgeted. These higher than expected deficits forced the government to increase borrowings, reduce planned spending and increase VAT, the fuel levy and the taxes of high-income earners. Managing a country’s budget is similar to handling a household budget: the aim must always be to keep spending increases in line with income growth. Government spending has increased dramatically over the past decade, while the economy and income base have barely grown. The government is now consuming a much higher share of national resources that even a well-functioning tax system would struggle to fund. The double whammy is that this occurred at a time of poor revenue collection. Government spending in the current tax year is budgeted to be 30...
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