Tax Statistics bulletin reveals areas of growing concern

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With more than 200 pages of tax jargon, the publication does not make for light reading, but it does reveal burgeoning trends and dipstick observations of the South African tax landscape. SARS has made impressive strides in improving service delivery and broadening the tax base according to Stiaan Klue, chief executive of the South African Institute of Tax Professionals (SAIT), but he points to the support of small, medium and micro enterprises (SMME) as an urgent area of focus for SARS if they're to achieve their long term objectives.

Klue believes that there are many positives to take out of the Tax Statistics bulletin and one should give credit to SARS for the transparency of the their operations and the modernisation drive which has brought them up to world class standard. The establishment of the Tax Ombudsman Committee has opened up an effective communication channel for an aggrieved taxpayer, and the Davis Tax Committee has been instrumental in guiding policy reform discussions.

Tax burden

However, the Tax Statistics bulletin also revealed areas that are of growing concern to economists and tax professionals. The tax burden (tax to GDP ratio) has increased to 26.1% in 2014, and to make matters worse, Finance Minister, Nhlanhla Nene, warned in his medium term budget that an additional R44bn in revenue will be required over the next three years. The general consensus is that there is little room left to increase tax rates, and that the only sustainable solution to the impending financial woe is to create significant economic growth.

Klue points to the development and support of the SMME sector as vital if the country hopes to extract itself from a precarious financial position and achieve the economic growth rates required. SAIT's research shows that the cost of compliance for a small business is in the region of R56,000 per year. "This is prohibitively expensive for many entrepreneurs, and SARS have a crucial role to play if it wants to broaden its tax base and act as a catalyst for economic growth," remarks Klue.

"SAIT calls on SARS Commissioner Thomas Moyane to establish a small business centre within SARS that has dedicated service leaders who are there to support entrepreneurs and guide them in the tax affairs," remarks Klue. "SARS enjoys success with their Large Business Centre (LBC), which is a world class facility that helps large businesses fulfil their tax obligations. Now is the time to focus on small businesses and to provide them with the tools and support services so that they can develop, create jobs and contribute to the economic well-being of the country."