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National Treasury has revised gross tax revenue estimate for 2020/21 by R8.7bn billion compared with the projection in the June special adjustments budget.
Gross tax revenue is expected to reach R312.8bn (17.9%) below the 2020 Budget forecast.
South Africa’s tax-to-GDP ratio will decline to 22.9% from 26.3% – a strong and sustained rebound in economic growth is required for this ratio to return to 2019/20 levels.
Monthly tax collections are still below 2019/20 levels in many tax categories. Domestic value-added tax (VAT) collected in the first six months of 2020/21 was 6.7% lower than the same period in 2019/20.
National Treasury says there a several reasons impacting in-year revenue collection. As many people lost income, there has been significant declines in personal income tax collections. Weaker import outlook has resulted in reduced VAT and customs expectations, and sharp reduction in consumption has lowered domestic VAT collection.
Downward adjustments in specific excise duties associated with a longer-than-expected tobacco ban have contributed to tax collection. In addition, stronger than-expected corporate profitability, has limited the anticipated reduction in corporate income tax and dividend tax receipts.
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