Tax kitty hits a trillion

South Africa's tax revenue increased by R83-billion to more than a trillion rand, SA Revenue Services said yesterday, as taxes on personal incomes compensated for a dip in company taxes.

Total revenue grew to R1-trillion in the 2015-2016 fiscal year, in line with the SARS target.

SARS said tax on personal incomes, which accounts for the largest share of government revenue at 36.4%, increased by 10% to R389.3-billion.

"This was quite significant considering the low growth environment we are in," said SARS executive Randall Carolissen.

The South African economy is forecast to grow at only 0.5% this year by the national Treasury, with major sectors of the economy contracting due to a lack of demand locally and abroad.

In his medium-term budget policy statement last month, Finance Minister Pravin Gordhan predicted wider budget deficits up until 2018-2019.

Collections from corporate tax, while up from a year ago, shrank as a total of revenue, growing to R193-billion from R185-billion in the previous year.

"Companies are still carrying forward losses from the previous period," Carolissen said, referring to last year.

South Africa, hard-pressed to push up revenues and bring down spending, dodged downgrades of its debt to sub-investment grade by rating agencies Fitch and Moody's over the weekend. S&Pis due to give its review on Friday.

South Africa's business confidence fell in the fourth quarter, an outcome that jeopardises efforts to boost economic growth and avert credit rating downgrades.

The Rand Merchant Bank index compiled by the Bureau for Economic Research fell to 38 points in the fourth quarter from 42 in the three months to September, weighed down by a weaker currency and high fuel prices.

"In no way do the fourth quarter survey results imply that a notable economic recovery is upon us," the bank said in a statement.

"Rather, the results continue to point to a 'muddle-through' scenario where growth, in all likelihood, continued to move broadly sideways at a low rate in the second half of the year."

Fitch and Moody's, which affirmed the country's investment-grade credit rating on Friday, cited the low level of business confidence as one of the downside risks to growth.

Stand & Poor's Global Rating, which rates South African debt on the lowest investment level with a negative outlook, is expected to publish its decision on Friday.

The government has been trying to avert a sovereign rating downgrade to "junk" status that would raise borrowing costs and deter investment.