Tax Ombudsman - Why Another Institution?
01 November 2010
Posted by: Author: Jonathan Friedland
Tax Ombudsman - Why Another Institution?
The Taxpayers’ Foundation of SA has added its voice to the calls by various tax experts for a tax ombudsman. But do we really need another institution in South Africa? Another body to drain the fiscus of our hard-earned resources? Yet another government-appointed organisation?The answer is an unqualified yes.The existence of an ombudsman is a key feature of a democratic country and we should be aspiring to this goal.
An ombudsman is an independent official who is appointed to investigate complaints that people lodge against public or private organisations.A tax ombudsman would thus deal with disputes arising between taxpayers and SARS.It would provide redress to taxpayers against harassment from maladministration, abuse of power, negligence, error and corruption of tax officials.Overall, it is the practical realization of taxpayers’ constitutionally entrenched rights.
Essentially, a tax ombudsman would function as an independent and impartial mediator for tax related disputes as well as ensure that procedures adopted by the revenue authority are legally sound.This would have an enduring impact on South African citizens as it would cultivate greater trust in the country’s tax system, foster voluntary compliance and engender accountability on the part of government.All of which takes added importance given South Africa’s growing middle class tax base.
A tax ombudsman would be able to identify systematic and repeated issues of abuse which can then be recommended for rectification and improve overall service to the taxpayer.Apart from procedural oversight, an ombudsman would be a body to which aggrieved individuals and businesses could seek recourse if they feel their rights infringed upon.Presently, the only practical avenue open to taxpayers is via the High Court.There is almost unanimous consensus that this process is prohibitively costly for most individuals to pursue in their personal capacity and, as such, South African citizens are left without a forum to mediate their grievances.An ombudsman would fill this void.Such an ombudsman thus empowers the average individual citizen and supports small businesses which are so vital to our economy.An ombudsman would provide recourse in a cost effective and expeditious way.
On a broad level, a tax ombudsman would recognise the importance given to the development and consolidation of democracy and the rule of law as well as fundamental freedoms.Furthermore, it encourages civil society in democratic participation becoming an effective force for positive change. After all, one of the most complex relationships between the State and the individual is taxation; ensuring taxpayers’ rights via an ombudsman is thus crucial in the advancement of a liberal democratic society.
The fact that an ombudsman would oversee that tax collection procedures are not abusive and unconstitutional takes added significance in South Africa given SARS is giving force to existing powers which allow it to collect what it determines as outstanding taxes, directly from taxpayers’ bank accounts, which many tax commentators have labelled as legally ambiguous.Furthermore, SARS is not immune to the problems faced by any large organisation.Whilst strategy from middle and upper management may dictate fairness and client service, this may not always be implemented on the ground by other staff. We would thus hope that SARS would support an ombudsman to achieve their stated goals of greater equity and efficiency.After all, the banking and insurance ombudsman serve a very meaningful role that could be replicated for taxation.
If SARS officials knew that such a body existed, it would in itself inculcate better service and less abuse. This would lend credibility to the tax system, entrench fairness and in so doing taxpayer cooperation. Furthermore, SARS should not believe that its officers are beyond human error; human error in these circumstances could be devastating for the taxpayer and especially businesses. South African law accords SARS far-reaching powers and it is essential for such power to be tempered by a counterbalancing force – this would be the role of an ombudsman.
In essence, if a taxpayer feels that they have been treated unreasonably, discriminatory or arbitrarily; if officials abuse their power, behave incompetently or inefficiently, the taxpayer would be able to seek remedy via the ombudsman.In addition, if taxpayers feel they have been neglected or unreasonably delayed, they would have an avenue to seek recourse.
The issue has been raised previously by members within the legal and accounting fraternities, we now hope to bring the most important voice to the debate being that of the taxpayer. With a unified effort and the most important constituent in the debate now represented, we believe significant steps can be accomplished in realising the goal.At the end of the day, if South Africa wants to be considered on a par with other advanced democratic societies, we need the institutions that give effect to this – a tax ombudsman is one such institution.
Source: By Jonathan Friedland (TaxTALK)