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We can’t afford SARS slippage

04 April 2016   (0 Comments)
Posted by: Author: BDlive
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Author: BDlive

More than a decade ago, then finance minister Trevor Manuel and then South African Revenue Service (SARS) commissioner Pravin Gordhan began the tradition of releasing year-end tax collection numbers to the media just 12 hours after the fiscal books closed at midnight on March 31.

The tradition has continued, but this year SARS did not quite make the deadline, pushing the time of Friday’s media briefing out to 1pm to accommodate Mr Gordhan, who is now finance minister for the second time around.

It was not clear whether Mr Gordhan had initially even been invited. This is possible, given the standoff between the commissioner and his political boss. In the event, Mr Gordhan was there, sharing a platform with SARS commissioner Tom Moyane for the first time since the February budget briefing, at which Mr Moyane was not present. The dispute between Mr Moyane and Mr Gordhan is in no way resolved, and President Jacob Zuma is clearly disinclined to do anything about it any time soon, even though he supposedly is leading a process to resolve it. And just as Mr Zuma’s Friday evening statement on Nkandla seemed to demonstrate that he has no shame and doesn’t feel particularly apologetic, so Mr Moyane’s performance at the SARS briefing suggested he has no shame either.

Although Mr Gordhan instructed Mr Moyane earlier this year to halt the far-reaching restructuring of SARS’s operations, the commissioner has pressed ahead — and on Friday, spent much of his speech trumpeting the achievements of the restructuring process, rather than talking about tax collections as such.

The operational restructuring went live earlier this year and it’s hardly possible that it could have had anything to do with the tax numbers for the fiscal year just ended. Indeed, markets, rating agencies and the Treasury will be watching closely to see that the inevitable disruptions caused by any restructuring process do not disrupt collections in the coming year or two. This is a real danger, given the extent to which Mr Moyane and the management consultants advising him have turned SARS upside down.

SA certainly needs the efficient and effective revenue service that Mr Moyane promises, at a time when growth is weak, the fiscus is under pressure and SA’s sovereign credit ratings are close to being downgraded to junk status. We have little transparency at this stage on exactly what Mr Moyane is doing, and certainly no evidence yet on the outcomes.

Fortunately, SARS’s 14,500 staff members rose to the challenge again and by midnight on Thursday had brought in more than R1-trillion in taxes, exceeding February’s budget estimate by R154m. This is the first time the government has budgeted for more than R1-trillion in tax revenues and Mr Moyane trumpeted this too. But while the people at SARS deserve the thanks and praise that Mr Gordhan heaped on them, as did Mr Moyane, a little humility on the commissioner’s part would not have hurt. SARS may have come in a little above February’s budget number, but it is important to remember that the number was R12bn below last February’s original budget estimate. The economy is largely to blame, and SA is lucky to have built, over many years, an institution as effective as SARS, which can collect in such tough times. But that institution’s effectiveness, integrity and credibility cannot be taken for granted. It needs to be carefully stewarded. SA’s sovereign rating and the government’s ability to deliver on its commitments are intricately linked with SARS’s fortunes. Mr Gordhan should arguably be taking even more assertive action than he has done so far to get a grip on the revenue service.

Friday’s briefing suggested he will be probing the tax numbers and SARS’s approach very carefully. Markets and stakeholders should keep a very close eye too.

This article first appeared on bdlive.co.za.


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