On 23 February 2022, Minister of Finance Enoch Godongwana delivered his maiden Budget speech amid a difficult climate of COVID-19 pandemic, economic uncertainties, high level of youth joblessness and the effect of the July unrest.

We provide herewith the analysis and the commentary of some of the major budgetary items:

2021 Projected tax revenue versus projected actual

In the 2021 Budget, the main budget revenue for 2021/22 was projected to be R1.35 trillion. South African Revenue Service (SARS) is now expected to collect tax revenue amounting to R1,55 trillion for 2021/22, an amount which is R182 billion higher than last year’s Budget.

The positive variance of R182 billion was a result of better than expected collections of provisional tax payments mainly from the mining sector due to the sector experiencing favourable high commodity prices. With the easing of the lockdown restrictions last year, finance and manufacturing sectors which, historically were main tax contributors also showed positive performances and this has also played a role in the projected positive budget variances.

Furthermore, the recent effort by the Commissioner for SARS to recruit highly skilled staff and invest in the modern IT infrastructure appears to have yielded positive outcomes as evidenced by improved revenue collections and compliances.

2022 revenue projections                                                

The main tax revenue for the 2022/23 fiscal year is projected to be R1.6 trillion or

24.7 per cent as a share of Gross Domestic Product (GDP).  The attainment of this tax revenue target is based on the projection that SA will achieve a real economic growth of 2.1% for 2022.

The ability of the Treasury to correctly project the performance of the economy has a direct bearing on whether the tax revenue will be collected or not.