Our business has an accountant and I always tell her that her job is to save the business as much money as possible while staying legal and complaint.
The South African Revenue Services has appointed 1000 new tax/debt collectors to work on their behalf to find more taxes and any taxes outstanding. This is going to cost R4 billion with the hope of raising R50 billion. This kind of highlights how desperate they are and the guess is they are going to target all businesses and high income earners. There is a tax shortfall in the budget and they need to find the funds required and I guess they are going to come at everyone very hard.
We often hear of the 80/20 rule where 80% is generated by just 20%, but in this case in SA it is more like the 20% generates 100% and why tax payers find this system really unfair. When so few are paying for everything the big problem is this is having a knock on effect as more businesses close their doors leaving more reliant on unemployment benefits. Hence the reason why more taxes have to be found and chasing outstanding amounts is what they are going to be doing and looking for any other tax sources. They will not find the missing billions and they should just turn their money printer on because I see no other solution. They could stop the corruption which has created this financial disaster, but then why would they think of doing that.
This was kind of expected when i wrote an article about cash limits from the ATM's as having cash is seen as one way of being able to dodge paying VAT. Off the books jobs are very popular for the parties involved and I have to say I agree with this. In many ways these off the books type deals protect the work force and it is so on many of my purchases. This is more about saving the business money via the back door than making a profit for myself. This is not something I would normally have to even consider, but in these economic times if you are not doing this then it is your loss.
What the extra 1000 tax collectors really means is more audits and follow ups with less time to make things right. In the past they would offer you some leeway, but these are desperate times requiring desperate measures. What is often the case is that SARS will end up with less taxes and more businesses closing down as the majority have been in survival mode since covid and the only reason they have outstanding taxes is they cannot afford to pay them. This is not a case of not wanting to pay as many cannot pay and it is a decision to keep the staff employed and the lights on hoping they can find a financial solution.
When I read articles regarding debt that the majority of those earning a monthly pay check are spending 80% of their income paying off existing debt there is no extra money set a side for a door knocking tax man. I can guarantee if those people cannot budget accordingly and live within their means then they are definitely the households who owe the tax man something. Logic tells you they are in for a troublesome time and their pain just got a whole lot worse.
This will be interesting to follow to see what SARS is going to be targeting and would rather wish they audited their own politicians to see where all the tax money is being stolen. According to reports there is an estimated R500 million being stolen daily through government tenders which if they clamped down on this works out to 100 days of finding the R50 billion SARS tax collection target.