Will the tax ombud’s new independence be enough?
15 August 2016
Posted by: Author: Amanda Visser
Author: Amanda Visser (BDlive)
Proposals to give the Office of the Tax Ombud more independence have been welcomed, but some say they still leave the ombud hamstrung.
The office was established to assist taxpayers who have been unable to resolve specific issues with the South African Revenue Service (SARS), so its independence is critical to its success.
But that independence has come into question as a result of the influence that the SARS commissioner and the finance minister wield.
In the proposed changes contained in the 2016 Tax Administration Laws Amendment Bill, the ombud’s term of office would be extended to five years from three; the ombud would be able to appoint its own staff rather than second staff from SARS; and it would be able to draw up its own budget even though it would still be funded by SARS.
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But one proposal that has caused concern is that only "at the request of the minister" would the ombud’s office be able to review any systemic and emerging issues related to a service matter or the application of the Tax Administration Act that negatively affect taxpayers.
The tax ombud, Judge Bernard Ngoepe, says his office is still talking to the ministry about this. "These engagements include giving the ombud power to initiate investigations of emerging or systemic issues that it might identify in SARS," he says.
Currently the ombud’s office does not have the authority to initiate investigations.
Comments on the proposals have closed already.
Ngoepe says the proposal for a five-year term is based on a study of similar institutions within and outside SA. The longer term will make it easier to recruit people with the right qualifications to the position, he says.
Johan van der Walt, a committee member of the South African Institute of Tax Professionals (SAIT), says in a submission to the Treasury: "The amendments take a step towards full independence, but continue to hamstring the tax ombud. We fail to see the reason for the continued limitations.
"In the main, we fail to see why the tax ombud cannot review systemic tax issues without first seeking the support of the finance minister. The tax ombud should be free to advise and comment on systemic issues as the tax ombud sees fit."
Van der Walt says the power of the tax ombud’s office to freely comment is important, especially in the case of Parliament and public discourse.
"The law cannot be written exclusively by the police of any law without some assurance that public rights are protected in a meaningful way," he says in his submission.
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Participation by the ombud and his office in public discourse is essential, given the lack of any other meaningful counterweights in this area, he says.
These reasons "may" be included in a report to the minister or the SARS commissioner. According to Treasury, this will ensure the ombud is able to review the "reasonableness of the reasons to inform future action".
Ngoepe says his office is not a tribunal or a court of law. And it does not want to complicate its process. "In most cases SARS has implemented the ombud’s recommendations. If a recommendation is not implemented, we include that in the annual report to the minister that is tabled in Parliament," he says.
Ngoepe acknowledge that the inability to force SARS to give reasons for not implementing the ombud’s recommendations is a weakness in the current legislation.
In its submission SAIT also raises the issue of timelines. The legislation requires SARS to respond to the ombud’s queries but sets no timelines. "This lack of any timelines for SARS has become a common theme in the Tax Administration Act. The act consistently imposes various strict timelines for taxpayers with no corresponding timelines on SARS."
SAIT says this "one-sided approach" to the act is widely perceived to be "patently unfair" and is a cause of common complaint.
In its annual report for last year, the ombud identified SARS’s failure to adhere to turnaround times for objections and appeals as a shortcoming.
"There is a general disregard for the time frames set out in tax legislation and the alternative dispute resolution rules," it says in the report.
"While taxpayers are expected to strictly comply with the time frames set out in the dispute resolution procedure, SARS fails to do the same. This noncompliance relates to 19% of all cases accepted by the Office of the Tax Ombud for the period."
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SAIT says it doubts this approach would prevail if there were effective voice in policy development advocating for taxpayers’ rights.
The institute would also like to see the powers of the ombud extended to allow requests for temporary injunctions against SARS action before the courts.
Taxpayers, especially those of lesser means, often need protection to hold back the large administrative machinery of SARS in egregious cases, SAIT says.
This article first appeared on bdlive.co.za.