(Ecofin Agency) - The South African Revenue Service (SARS) projected R285 billion (about $15.3 billion) decline in tax income this year due to the impact of the coronavirus pandemic on the already weak economy.
SARS Commissioner Edward Kieswetter was of the view that revenue performance will be lower than the February Budget announcement by between 15-20%, meaning revenue under-recovery could move to R285bn.
The Commissioner revealed that the preliminary assessment of revenue performance showed an under-recovery of about R9 billion (about $482.5 million) for April 2020, down 8.8% YoY.
According to Edward Kieswetter, the decline in South Africa's tax revenue is mainly in the collection of income tax, VAT, import taxes, corporate tax, and VAT credit refunds.
With economic hardship, with GDP growth decelerating to 0.8% and 0.2% in 2018 and 2019 respectively, South Africa is expected to experience a severe recession as a result of the pandemic. The growth rate is expected to be -5.8% in 2020, according to the International Monetary Fund (IMF) projections.
The budget deficit is expected to be 13.3% in 2020 against 6.3% in 2019, while public debt is expected to increase significantly to 77.4% of GDP against 62.2% in 2019.