SRA FALLS 19% SHORT OF TARGET

MBABANE – The impact of reduced activity in the economy has resulted in the Eswatini Revenue Authority (SRA) collecting 19 per cent less of what they were targeting in the first month of the financial year.

This was revealed by SRA Commissioner General Dumisani Masilela in an interview yesterday.
Masilela said the figures for one month indicated that the country was already starting to feel the negative impact of the situation, particularly the lockdown. There has been a notable decline in figures for value added tax.

“If people are not trading, that means the consumption is depressed and therefore we are not surprised by the fact that we are 19 per cent below what we targeted to collect in the first month of the finacial year and 8 per cent below what we collected last year.

Shortfall

On potential shortfall for the year, Masilela said they would be informed by many factors including how long the situation persists.
“We did the simulations based on estimation to say if it lasts for this long, this is what we think is going to happen. Logic says the longer it persists, the more difficult it is going to be,” he said.

In South Africa, the government faces a potential revenue shortfall of up to E285 billion this year, posing a catastrophic scenario which could raise the likelihood of further approaches to multilateral agencies such as the IMF for financial support.
This was revealed by SARS Commissioner Edward Kieswetter, who said though it was still ‘early days’, the tax agency’s initial estimates suggest tax collections will be down by 15 per cent-20 per cent from those forecast in this year’s budget, based on April’s revenue collection performance.

Recession

The estimated shortfall is due to a sluggish economy, which was already in recession before the coronavirus pandemic hit SA, as well as the effects of the lockdown ordered by the government to slow the spread of the virus.
“The R285bn gap would have dramatic consequences for the government’s budget deficit, its debt sustainability and debt service costs should it materialise,” said Stanlib Chief Economist Kevin Lings.

“It would require ‘dramatic action’ from the State, including deep cuts to expenditure and possibly a more comprehensive fiscal support package from agencies such as the IMF that would include greater conditionality,” he said.

Estimates

BusinessDay reported that the SARS figures follow estimates supplied by the Treasury last week, based on research from the UN University World Institute for Development Economics Research (UNU-Wider); suggesting SA’s economy could contract as much as 16 per cent this year depending on the length and severity of the pandemic and the lockdown effects.

The worst-case scenario predicts as many as 7 000 000 jobs could be shed, according to the presentation.
The projected revenue shortfall could potentially push the government deficit towards 16 per cent of GDP, Lings estimated, against the 6.8 per cent forecast in this year’s budget.

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