Tax Ombud coming
18 June 2012
Posted by: SAIT Technical
By Malcolm Rees
JOHANNESBURG - Consumers frustrated by their dealings with the South African Revenue Service (Sars) could have access to a Tax Ombud by next year charged with mediating tax related complaints and identifying systemic issues in SA's revenue collection framework.
The ombud will be brought into existence through the legal framework outlined in the draft Tax Administration Bill (TAB)which is expected to be promulgated in between four and six weeks.
But while the Bill does bring some new protections for the taxpayer its primary purpose is to increase the efficiency of SA's revenue collection mechanisms, effectively so that they might generate more money for the state.
In the face of a wide extension to Sars's investigative and punitive powers under TAB will the new ombud become an effective remedial channel for frustrated taxpayers?
According to the legislation, the acting minister of finance, currently Pravin Gordhan, must appoint a tax ombud for a term of three years once the amendments are signed into law by the president.
This ombud must have a solid background in customer service and tax law and will be accountable to the minister.
The ombud is mandated to "review and address complaints by a taxpayer regarding a service matter or a procedural or administrative matter," according to law firm Edward Nathan Sonnenbergs (ENS).
She should "review a complaint and resolve it through mediation or conciliation; act independently in resolving a complaint and allow informal, fair and cost-effective procedures in resolving a complaint," says ENS.
However, the ombud will be financed by Sars, with its offices on Sars premises and will be staffed by Sars employees.
Further, recommendations and findings handed down by the Ombud are not legally binding on Sars and the mandate of the ombud does not extend to deal with legal disputes.
These limitations have led to some concern that the envisaged Ombud will lack both independence and power, limiting its effectiveness in balancing the new powers of Sars against consumer rights and in compelling the resolution of disputes.
"Some people take the view that the Ombud should be totally out of revenue, totally separate," says Dr Beric Croome, a tax executive at ENS.
However, Croome notes "that's not what is done internationally ... most of these offices are within the revenue but you try and give them a degree of independence in terms of reporting lines and that sort of thing.
"At the end of the day the critical thing is the nature of person who is appointed to head that unit up ... whether they will have the confidence from taxpayers and from revenue to do the job effectively," he says.
"It's a trust relationship between two competing interests with the consumer on the one hand and Sars on the other, you need a strong person to manage that difficult relationship.
"Once the bill is enforced the minister has a year in which to appoint someone but what the process is on that appointment is not clear ... it could be that the minister simply approaches someone and asks if they are prepared to act," says Croome.
Consumers experiencing issues with Sars will, in most cases, still need to go through current dispute resolution channels prior to approaching the Ombud.
"The basic rule is that where you have an issue you have to report that to your local Sars office," either through its call centre or through a personal contact for larger tax players.
Complaints cann then be escalated to Sars' Service Monitoring Office (SMO) prior to being referred to the Ombud, says Croome.