The gross tax revenue estimate for 2020\/21 has been revised down by R8.7 billion compared with the projection in the June Special Adjustments Budget, National Treasury said on Wednesday. <\/p>\n
Finance Minister Tito Mboweni said in the supplementary budget in June that National Treasury expected to miss its tax revenue target by over R300 billion this year. <\/p>\n
\u201cThis deterioration is aligned with revised economic growth projections and the expected performance of the major tax bases. <\/p>\n
\u201cGross tax revenue is expected to be 17.9% lower than collections in 2019\/20, or R312.8 billion below the 2020 Budget forecast. <\/p>\n
\u201cThe tax-to-GDP ratio is expected to decline substantially, dropping from 26.3% to 22.9%. <\/p>\n
\u201cA strong and sustained rebound in economic growth is required for the tax-to-GDP ratio to return to levels seen in 2019\/20,\u201d National Treasury said. <\/p>\n
Tax revenues, which fell sharply during the first several months of the Coronavirus pandemic, have begun to recover. <\/p>\n
However, Treasury said monthly collections remain well below 2019\/20 levels in many tax categories. <\/p>\n
\u201cFor example, 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.\u201d <\/p>\n
Treasury said key factors affecting in-year revenue collection include:<\/p>\n
\u2022 A significant decline in compensation, and therefore personal income tax, due to the lockdown.<\/p>\n
\u2022 A weaker import outlook, which has reduced VAT and customs expectations.<\/p>\n
\u2022 A sharp reduction in consumption, lowering domestic VAT collection.<\/p>\n
\u2022 Downward adjustments in specific excise duties associated with a longer-than-expected tobacco ban.<\/p>\n
\u2022 Stronger-than-expected corporate profitability, limiting the anticipated reduction in corporate income tax and dividend tax receipts.<\/p>\n