2019 Budget Speech: Rebuilding confidence: renewal and hope
The 2019 Budget Speech was an honest rendition of the challenges facing South Africa, with a commitment to put plans in place to boost confidence, promote economic growth and prioritise social upliftment. Tax revenue, however, remains challenging, owing to a combination of economic weakness, poor tax administration by the SA Revenue Service (SARS), and higher-than-expected VAT refunds. Despite these challenges, the Budget Speech delivered good news to taxpayers.
Good news for taxpayers: Personal income taxes and VAT refunds
In contrast to tax increases in the last four years, the latest Budget did not raise personal income taxes. In addition, there is a slight increase in the tax-free threshold for personal income from R78 150 to R79 900, providing some relief for lower income groups. A further positive is that the Trust tax and transfer duty rates remain unchanged. With the burden that the Treasury faces, this is certainly refreshing.
Over the last few years, VAT refunds have become increasingly difficult. Treasury is now making a concerted effort to pay out overdue VAT refunds and the credit book decreased from R41.8 billion to R31 billion by end January 2019. The normalisation of refund payments provides businesses with greater certainty on cash flow and revenue projections.
Making SARS more efficient
It is certainly good news for taxpayers that our money is in the hands of Minister Mboweni. He understands the private investment sector and recognises the challenges South Africa is facing. Given that tax revenue remains challenging, one of Minister Mboweni’s priorities is streamlining the SARS processes to make this entity more efficient. We can also expect the appointment of a new SARS commissioner in the upcoming weeks.
SARS certainly has work to do in restoring public faith and trust. Not only has SARS been struggling to collect money from taxpayers, who have lost faith in the system due to corruption and irregular expenditure, but their IT systems needs a major overhaul to improve on tax collections. Getting SARS back on track will be a combined effort by Government and us as tax payers. A more efficient SARS will ensure increased revenue collected and assist the Government in implementing initiatives to boost the economy.
With these positive changes within SARS, it should become easier for taxpayers to submit returns and get tax refunds paid out as quickly as possible. This will be welcomed by all taxpayers.
It will be a challenging journey – but an exciting one! We will continue to assist our Chartered clients to ensure tax compliance and look forward to a sincere and reliable relationship with SARS.