South Africa’s Finance Minister says tax target could be lower than expected, here’s why

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JOHANNESBURG (Reuters) – South Africa’s tax take could well be lower than forecast this year, with a downturn in the economy exacerbating problems at the tax revenue service, Finance Minister Nhlanhla Nene said on Monday.

The country entered recession in the second quarter for the first time since 2009.

Nene said tax avoidance and evasion would rise in any economy that was growing slowly and where taxes have been increased, and the recession would only worsen matters.

“There is now additional downside risk to the tax revenue projected at the beginning of the year because of the contraction in the economy,” Nene told a tax conference.

“Fixing our economy to ensure that it grows faster and in a more sustainable manner is therefore critical.”

Nene also cited problems experienced by the South African revenue service (SARS).

President Cyril Ramaphosa suspended its commissioner Tom Moyane in March over alleged misconduct during the previous administration of Jacob Zuma, establishing an inquiry into the allegations two months later. Moyane has denied wrongdoing.

Reporting by Mfuneko Toyana; Writing by James Macharia; editing by John Stonestreet

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