The South African Revenue Service (Sars) has revealed that over 20 000 people in the country were retrenched in April.
Speaking at a media briefing on Tuesday, May 5, Sars commissioner Edward Kieswetter said that last month’s retrenchments saw an increase of 1622 employees, almost 9% compared to April 2019. A report from Statistics SA also shows that liquidations increased in February this year by 12.3% compared to February 2019, and insolvencies by 13.9% for January 2020 compared to January 2019.
The revenue service is predicting R285-billion less in projected taxes this year, which equals 15-20% under-recovery on the budget presented in parliament earlier this year. R9-billion was under-recovered in April alone.
This under-recovery is a result of the devastating effects of the COVID-19 pandemic, and less people paying Pay As You Earn (PAYE). The pandemic has hit businesses hard and dramatically reduced economic activity, which will have long-term tax revenue implications.
“From the preliminary assessment of revenue performance of the first month we can report the under-recovery of around R9-billion for April represents a year-on-year decline of 8.8%,” said Kieswitter.
The main drivers for this under-recovery includes Pay As You Earn (PAYE) which is down on the prior year by 5.2% over 65 219 employers who made payments in April 2019, but no payments in April 2020 (tax value of R3.8-billion) and 87 137 employers, who made payments in April 2019 made lower payments in April 2020 (tax value R6.1-billion),” Kieswetter said.
Kieswetter urges taxpayers to remain compliant in these tough times.
“During this time it remains vital for taxpayers to be compliant. More than ever government needs tax revenue to provide much-needed relief to businesses and individuals, and especially to keep an army of community health workers and other medical and front-line workers employed,” Kieswette said.