Edward Kieswetter’s R160 billion headache

South African Revenue Services (SARS) commissioner Edward Kieswetter said the revenue service will lose at least R60 billion this year because of load-shedding, but it could be as much as R160 billion.

Speaking to Newzroom Africa, Kieswetter said the R60 billion he previously mentioned is a preliminary estimation. However, they believe the actual losses will be much higher.

Kieswetter cited a CSIR report which estimates that the South African economy lost R560 billion because of load-shedding.

The economic losses were due to 6,400GWh of unserved energy by Eskom over the last calendar year.

South Africa has a tax-to-GDP ratio of 25%. A rough extrapolation means SARS lost at least R140 billion.

However, it does not consider the downstream effect of power cuts, like businesses and factories closing down.

Kieswetter, therefore, estimates that a less conservative figure of the cost of load-shedding on SARS’ tax collections can be as high as R160 billion.

“We are doing more research and are trying to understand the time lag effect in what happens in the economy and what happens in the fiscus,” he said.

South Africa had the worst-ever load-shedding in 2022, and Kieswetter expects the impact on the economy to be even worse this year.

The significant loss to the South African fiscus means the country has less money to provide social services, employ key personnel, and provide additional social grants.

“If the growth in electricity production slows down, as it has in South Africa, there is a direct and immediate impact on the economy,” he said.

Kieswetter said apart from collecting fewer taxes, load-shedding is also costing SARS millions in operational costs.

“SARS had to put in its own supplementary power supply. Last year alone, we spent R50 million on diesel,” he said. “We are now looking at solar with battery backup to provide business continuity.”