Finance Minister Enoch Godongwana delivered his Budget speech on Wednesday, revealing critical strategies to address a R75 billion revenue shortfall.
Image: Armand Hough / Independent Newspapers
The budget allocated to the South African Revenue Services (SARS) for the 2025/26 financial year has remained unchanged, at R7.5 billion, to the amount allocated in the March budget.
This is despite calls in some quarters prior to the tabling of the 2025 budget that the revenue services should be allocated more money in order to build its capacity to collect more tax.
In the budget documents, Finance Minister Enoch Godongwana has allocated R7.5 billion to SARS over the next three years to build capacity to collect more tax.
The budget documents said SARS will receive an additional R4 billion over the medium term.
The amount will supplement the R3.5 billion proposed during the 2024 Medium Term Budget Policy Statement to improve efficiency and transparency in tax administration.
“This funding will focus on using technology, data science and artificial intelligence to improve efficiency and transparency in tax administration,” reads the document.
The National Treasury said additional funding will help improve the revenue service’s capabilities to raise revenue, support the digital transformation, enable the modernisation of core systems, and invest in identified priority areas such as customs modernisation and other capital projects.
Addressing Parliament, Godongwana said the R7.5 billion will increase the effectiveness of SARS in collecting more revenue.
“Part of this allocation will be used to increase collections from debt owed to the fiscus. SARS has indicated that this could raise R20 billion to R50 billion in additional revenue per year,” he said.
He also said part of the additional allocation to SARS will be used to improve modernisation to target illicit trade in tobacco and other areas, which should boost revenue over the medium term.
“As SARS utilises this investment to raise additional revenue, which I believe can be at least R35 billion, the R20 billion to close the current revenue gap will not have to be raised through taxes.”
The National Treasury said the government remained committed to its long-term objectives of broadening the tax base and improving the efficiency and effectiveness of SARS for sustainable revenue collection.
The budget document said SARS collected R95 billion in debt in 2024/25.
It is expected that with the additional R7.5billion, SARS is expected to increase debt collection by R20 billion to R50 billion per year.
“This potential revenue is not included in the revenue estimates. However, the performance of SARS will be monitored by assessing the change in the amount of cash collected from debt, which will be published monthly.
“If successful, the R20 billion in tax increases to be proposed in the 2026 Budget will be reconsidered.”
The National Treasury has proposed tax measures to raise R18 billion in 2025/26 and provide R1 billion tax relief in 2026/27.
The budget documents said there will be no adjustment to personal income tax brackets and rebates.
There will be inflationary increase in the general fuel levy, above-inflation increases in excise duties on alcohol and tobacco products as well as a diesel refund relief for primary sectors.
The budget documents said the 2026 Budget will propose tax measures to raise an additional R20 billion in revenue in 2026-27.
The measures are to be reconsidered if SARS is able to raise additional revenue through more efficient tax administration and higher tax compliance.
“SARS will receive additional resources to increase its revenue from debt collection by R20 to R50 billion per year,” the documents reads.
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