'Tax collection shortfall is direct consequence of state capture'

Finance Minister Tito Mboweni on Wednesday delivered the Medium-Term Budget Policy Statement.

In his speech, Mboweni said tax measures might be necessary to raise R150 billion over the next three years.

He noted that expenditure continues to exceed revenue and the national debt is increasing at an unsustainable pace.

RELATED: MTBPS a missed opportunity for government, says Cosatu

The minister said tax collection was short by nearly R53 billion and the consolidated budget deficit was now projected at nearly 6% of GDP in the current year, while government’s debt is soaring.

Sars commissioner Edward Kieswetter and University of Johannesburg School of Economics senior lecturer Dr Sean Muller join Bongani Bingwa to discuss the Medium-Term Budget Policy Statement.

Our economy is not performing and we are growing at a rate so pedestrian that we find the revenue declining. We have seen an increase in retrenchments and an increase in retirement. All of these compounded by the fact that Sars has been rendered less than optimally capable to collect revenue leads us to the situation we find ourselves.

Edward Kieswetter, Commissioner - Sars

He says one of the direct consequences of state capture is that general society now feels it has permission to become lawless.

We are seeing increases in VAT fraud and pay as you earn fraud in addition to the normal compliance challenges. This is all a function of a society that has lost confidence in the system and given itself permission to buck the law.

Edward Kieswetter, Commissioner - Sars

Muller says the extent of economic growth determines government revenue collection which in turn determines the country's ability to repay debt.

The real concern is that the debt in the GDP level is much higher than expected.

Dr Sean Muller, Senior lecturer - UJ School of Economics

Listen below to the full conversation:


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