The 2003/4 financial year, which ended yesterday, presented SARS with one of the toughest revenue collection challenges since this government was elected in 1999.
Despite the difficult economic climate during this period, this government, and its key fiscal agency, SARS, has once again delivered.
I am pleased to announce that SARS has virtually met its revised revenue target of R303, 3 billion for the fiscal year ending 31 March 2004. The preliminary revenue figure for the 2003/4 fiscal year is only about R500 million short of the target.
This means that the country's finances are in good health! Because of good collections and proper fiscal management, government is able to borrow less, increase the money available to spend on public services and sustain our country's fiscal sovereignty.
In my Budget speech on 18 February, 2004 I said that, 'As our economy weakened last year, similarly, our revenue collection has slowed.'
As a result, in the February 2004 budget we revised the estimate of total revenue collections for 2003/04 downwards from R310,025 billion to R303,3 billion. Even the revised revenue estimate of R303,3 billion was, in the opinion of some economic commentators, a difficult amount for SARS to collect.
Based on the revised target of R303,3 billion the key taxes have performed well. Corporate taxes in particular, performed well and came more or less on target at R60,65 billion. As far as the two other principle sources of revenue are concerned, personal Income Tax (R98,2 billion) has done surprisingly well and came in at the higher revised target. Value Added Tax came in slightly below of R81 billion. Customs duty is only slightly below target despite a significant decline in the value of imports.
A significant feature of the collection effort in the 2003/4 fiscal year is the fact that the enforcement initiatives of SARS have contributed very significantly to the collection success. Significant sums of money were collected from initiatives on PAYE defaults, customs duty, corporate and structured finance disputes and industry-based audits.
One of the crucial challenges facing this government in its first ten years of democratic governance was the creation of the right type of corporate and individual citizenship. Our citizens derive security from a world-class Constitution and also understand their obligation to contribute to an improving tax compliance culture and display a principled opposition to any form of criminality, including tax evasion. We have made significant progress in this regard although much still needs to be done.
All South Africans - government, business and individual taxpayers - can be proud of their achievement in this regard in the first 10 years of our democracy.
I would like to extend my personal gratitude to those individual and corporate taxpayers whose compliance with tax and customs laws has made it possible for SARS to meet the revenue target, thereby supporting government in achieving its objective of increasing its social spending and creating a better life for all.
The continuous efforts of SARS to broaden the tax-base, improve its service levels to taxpayers and pursue vigilant enforcement initiatives contributed directly to the increased revenue yield which will finance government's developmental agenda.
The past financial year saw the launch of dispute resolution mechanisms, improvements in SARS anti-evasion drive, the launch of the free e-filing facility to businesses, and a comprehensive drive to improve levels of tax payer filing.
The sustainability of revenue collection in the next fiscal year will again be dependent on the combination of macro-economic and geopolitical factors, improved compliance activity and operational efficiency. Our success during the last financial year bodes well for an equally good performance in meeting the revenue target of R333,7 billion for 2004/05.
The core objectives of SARS remain broadly to improve operational efficiency, reducing the tax gap and improve its service levels to taxpayers.
Building on these experiences, SARS will further its objectives in this coming financial year by shifting to a more proactive approach across all its work processes. SARS will focus its attention on extending initiatives already undertaken to improve the levels of compliance with tax and customs laws, as well as the quality of service to the public.
Other initiatives to support this approach will include:
Despite the challenging year just past, we remain confident that we will be on track to deliver a good performance in meeting the revenue target of R333,7 billion for 2004/05. The sustainability of performance in revenue collection will again be dependent on the combination of macro-economic and geopolitical factors, improved compliance activity and operational efficiency.
THIS IS NOT A APRIL FOOLS' JOKE!
ISSUED BY THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE