If there were any doubts about the dire situation faced by the SA Revenue Service (Sars) in raising tax revenue, finance minister Malusi Gigaba laid them to rest in his budget speech. In a move potentially fraught with political risk for the ruling ANC, Gigaba announced an increase in the Vat rate from 14% to 15%, effective on April 1. This will bring in an estimated extra R22.9bn in the 2018/2019 fiscal year, helping to close an annual tax receipt deficit approaching R50bn. "We always knew that when government increased the Vat rate we would be at the bottom of the revenue barrel," says Ernie Lai King, MD of tax consultancy One Road Consulting. The past fiscal year was always going to be a tough year for Sars on the tax revenue collection front. And it was — in no uncertain terms. Last February, then finance minister Pravin Gordhan set Sars a goal of collecting tax revenue of R1.265trillion, a 7% increase compared with the previous fiscal year. It was a daunting task in an economy ...

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