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CDE: Govt must improve tax collection to fix economy

The Centre for Development and Enterprise said that the country's tax regime, which was dominated by direct taxes such as personal and corporate income taxes, could contribute to slow growth.

The Mbombela branch of the South African Revenue Service. Picture: sars.gov.za

JOHANNESBURG - The Centre for Development and Enterprise (CDE) said that among the many urgent actions government must take to fix the economy was improving tax collection.

In its report on the country's debt-ridden public finances, the centre explained that there was also a need to rethink the structure of the country's taxes.

The Centre for Development and Enterprise said that the country's tax regime, which was dominated by direct taxes such as personal and corporate income taxes, could contribute to slow growth.

The report conceded that changing the tax structure could be hard, but raising indirect taxes such as fuel and VAT would be even more difficult due to political sensitivities.

Trade unions, including the ANC-aligned Cosatu, were still seething from the VAT increase last year and any further meddling would lead to tensions between the bodies, leaving government in the crossfire.

The CDE's executive director Ann Bernstein: "We have less capital available for houses, roads, universities, for bursaries, for water plants, distribution networks and the list goes on and on. If we do nothing, these trends will worsen."

Tax revenue shortfalls had consistently increased over the past five years with the amount reaching R57.4 billion in the 2018/19 financial year.

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