The Minister of Finance Tito Mboweni has laid out for us a budget speech which most of us expected to be tough and paint a true state of the nation. We mostly expected him to lay down the hammer on fruitless and wasteful expenditure, to curb unnecessary spending by our highly esteemed politicians.
The future seems to be hopeful however difficult. In the past few days the country has been left in the dark with nowhere to turn, we are motivated to look ahead as there seems to be a light at the end of the tunnel even with a weaker economic outlook.
In the 2018 Medium Term Budget Policy statement (MTBPS) the projected outlook for the tax revenue was R1.3 trillion and R1.5 trillion for spending which would leave the fiscus at a deficit of R215 billion. The tax revenue for the 2019 fiscal year was revised down by R15.4 billion, as compared to the projections made in October 2018. The Minister of Finance said the increase in the shortfall is due to higher than expected VAT refunds. This speaks directly to the issues at the heart of the nation, state capture, where VAT Refunds were illegally paid to a certain family.
VAT was increased from 14% to 15% as at 1 April 2018. However, even with the VAT increase the tax revenue collection was revised down. This raises the question; are we optimally collecting VAT on all vatable supplies of good and services?
As the Minister of Finance stated, we need to move with the times and be more electronically inclined, we should be focusing on areas such as VAT on electronic services, this is an ever-growing industry and should be regulated and be more stringent on compliance.
We have planted the seeds on rocky ground, and the only way to reap the fruit is to focus on VAT collection measures with a fine-tooth comb to ensure high levels of efficiency and effectiveness.
