HILARY JOFFE: Plug those tax gaps to make a decent dent in budget shortfall
Estimates are that the tax gap is well north of R100bn
Where is the government going to find the R40bn of tax hikes which June's emergency budget pencilled in over the next three years? It seems bizarre even to contemplate tax hikes at a time when tax revenue is tanking, in an economy that is not expected to regain pre-Covid crisis levels before 2023. Finance minister Tito Mboweni estimated in June that government revenue would fall R304bn short of February's budget estimates, with the deficit blowing out to 14.6%. Latest monthly data from the Treasury show revenue is already R130bn behind budget for the first five months of this fiscal year - more than double the record shortfall SA recorded during the global financial crisis.
The picture is worse than even the Treasury's bleak June projections, with revenue down more than 20% for the year to date. Though tax collections will pick up as the economy reopens and Covid concessions end, the shortfall could come in as high as R312bn, and R330bn for the year.