THE total revenue collection for the financial year 2021/22 is expected to decline by 7 percentage points, lower than the previous year, recording 47 percent of GDP.
Feb. 19, 2021
2 min read
Revenue drops by 7%
The Minister of Finance Thabo Sophonea
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For 2020/21, collection is expected to recover to 54 percent of GDP after it had steadily declined for four consecutive years at an average of 48 percent of GDP.
This was revealed by the Minister of Finance Thabo Sophonea when presenting the budget speech for the 2021/22 fiscal year on Wednesday at the National Assembly.
He said the decline in the past four years was mainly due to the continuous feeble economic activity, globally and at national level.
“The frail economic conditions had ramification effects on tax and non-tax revenue collection amidst the revenue mobilisation efforts made to increase revenue through higher tax rates and broadening of the tax base.
“For the financial year 2020/21, the recovery was further enhanced primarily by SACU revenue which is shared ax-ante,” he said.
Adding: “The projected decline in the 2021/22 financial year is underpinned by a sharp fall of SACU revenue from 27 percent in 2020/21 to 16 percent of GDP in 2021/22.
“In 2021/22, revenue target was set under a lot of strain, the already ailing domestic economy coupled with the COVID-19 pandemic shock. The total revenue is projected to decline by 7 percentage points lower than the previous year, recording 47 percent of GDP.”
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In the medium term, Mr Sophonea said domestic revenue is set to slowly recover with the post COVID-19 mitigation measures, which will bring the economic activity back to normal.
However, SACU revenue is expected to decline due to uncertainties and volatility faced by the SACU pool coupled with the expected huge negative adjustment in 2022/23.
“Domestic tax has also been growing at a steadily declining rate of 22 percent of GDP in the past two years and a further deterioration of around 19 percent of GDP as well as the prevailing deficiency of effective monitoring and management of non-tax revenue,” the minister also showed.