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Sars – Please protect me from yourself

The revenue service has tricky bridges to cross in its long, arduous journey to recovery.

In its 2019 financial report, the South African Revenue Service (Sars) announces itself as many things.

It is the collector of all taxes, administrator of laws, facilitator of legitimate trade, the protector of our economy and society (not much protection is evident).

It’s also the encourager of “fiscal citizenship” (I guess this refers to those who willingly rush to pay their taxes plus more), enlister of “new tax contributors” (presumably this means the shadow and illicit economy is being hollowed out), not to mention the provider of quality and responsive service to the public (though wasn’t this the reason the Office of the Tax Ombud was established?).

Taxpayers remember the last five years – adopting as a slogan the now-famous words introduced to the public at large by a then Sars exco member who implored a television interviewer: “Please protect me from yourself.”-

Read: Nugent loosens the final shackles

Slowly extricating itself from the grip of corruption, Sars received an unqualified (with findings) audit report, and demonstrated positive signs that it is on the road to recovery. But don’t get too excited. The road ahead is long and arduous, with tricky bridges to cross before it regains its lost reputation. 

The findings relate to the Office of the Public Protector’s report on “maladministration, corruption and improper conduct” issued in July. This relates to a prior period, and has been taken on review.

With Sars Commissioner Edward Kieswetter in charge, the rallying motto of “higher purpose” will gain traction – and hopefully long-standing issues between honest taxpayers and Sars will be resolved as soon as possible. The tax ombud is playing an essential balance in alleviating the suffering of taxpayers resulting from bad policies (repayment of refunds) and inept officials.

It only takes a few inept tax officials to damage relationships with taxpayers, and in the report Kieswetter acknowledges the majority of staff “who, despite difficult circumstances, endeavoured to honour their commitment to the higher purpose”.

Man with a plan

With a new commissioner, comes a new plan, in this case the 2024 Vision, built on several strategic objectives: clarity and certainty, public trust and confidence, efficient use of resources, modernising systems, increasing use of data, “high performing, diverse, agile and engaged workforce …”, make it easier for traders/taxpayers to comply, make it hard and costly for non-compliant traders/taxpayers. 

Sars was R14.5 billion short of the March 31 revenue target of R1 302 billion (collected: R1 288 billion). This is a big number and who would have suffered? The poor, of course – those in dire need of sustenance, health services, transport, education, the list goes on. Not the badly managed zombie state-owned entities who are given cash on demand to fill their empty troughs. This includes the myriad of funds that never publicly publish their annual financial statements.

Irregular expenditure, incurred before then acting commissioner Mark Kingon took charge, amounted to R29.1 million.

Bain & Co, the US-based management consultancy that contributed to the destruction of Sars during the tenure of axed commissioner Tom Moyane, repaid R29.7 million (which includes interest).

The R14.5 billion shortfall would barely have made a dent in the fast-rising levels of government debt, which at June 30 stood at some R2.8 trillion. And this amount should be expanded by what-ifs. What if a large state-owned enterprise (SOE) defaults on debt and government is mandated to cough up? What is the sum total of all the government guarantees issued, and the potential risk therein? Does the government have any idea of the financial status of those SOEs that haven’t yet filed their 2018 annual reports? 

As Sars is the self- appointed “encourager of fiscal citizenship” perhaps it can encourage National Treasury to answer these what-ifs before it tries to raise further taxes.

The days of keeping taxpayers in the dark and forcibly fleecing them like captive sheep are coming to an end. Taxpayers want answers and criminal prosecutions.

Some of the statistics given have no impact whatsoever on the amount of revenue raised nor on the efficiency of staff.

Questions, questions

For example, the number of tax returns filed. How long is a piece of string? How many companies did not bother to file tax returns? What did the penalties amount to? How many wealthy individuals who drive expensive cars without number plates and live below the radar pay tax? How many companies did not pay over pay-as-you-earn tax collected from staff? Has the lifestyle questionnaire been updated? Is it being used? How many companies were registered as dormant when, actually, they are not dormant? And what of those dormant companies with massive tax losses, with assets valued in the balance sheet at R1? Has a senior tax official with vast tax experience (this is a diminishing number) ever scrutinised the list of dormant companies?

During the year 1.9 million tax audits were conducted. So what?

How many of the 50 largest companies were audited? Does Sars have a plan – that a large company is audited every three or five years? What percentage of medium-size companies were audited? Were any loopholes/tax avoidance schemes detected? How many successful audits (those that resulted in additional revenue) were conducted? And how many did not have to be reported to the tax ombud by aggrieved taxpayers?

Targeted customs interventions seem to be gaining steam, with R3.7 billion collected from 6 828 seizures. This should improve when Sars decides on the stamp or track-and-trace system it will use to counter the illicit tobacco trade. 

The Voluntary Disclosure Programme (VDP) coughed up R3.2 billion.

Internal investigations

Sars has stepped up its fight against internal corruption, cases of which are investigated by a dedicated internal corruption unit; 173 were referred to the South African Police Service, an active balance of 466 is being dealt with, and 13 individuals (including four Sars officials) were criminally convicted.

Now that Sars is cleaning from within, what is the percentage of its staff who take the full allocation of annual sick and family responsibility leave? How many of its staff run side businesses? How many arrive at work, switch their computer on, and leave for the day?

Sars is slowly sorting out its exco, but still has to reach down to all the other management layers.

Like the shothole borer beetle, corrupt officials (the enablers and enforcers) have burrowed deep into Sars, laid their eggs, and are destructively sucking out the sap.

Inept officials are in vital posts and should be subjected to a skills audit. Sars is spending millions sending senior officials on expensive management training courses when, in fact, they require some basic tax knowledge. In a couple of years, some of Sars’s best brains are at risk of taking early retirement …

Kieswetter has my sympathy. He has walked into a vastly hollowed out organisation compared to the one he left behind some years ago. But he is inspirational, energetic and filled with moral purpose. 

The 2020/21 budget is looming.

Perhaps it will disclose the amount by which the fiscus has benefitted from the forfeited assets of tax criminals.

Taxpayers are waiting for the criminals to be jailed, and for their assets to be forfeited.

They are no longer willing to fund this mess.

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The number of wealthy individuals according to the statistics of SARS do not match the reality if I merely look around the fancy neighbourhoods in and around Cape Town. That alone tells me SARS is still totally clueless. I repeat, our national sport is not soccer. It is not rugby either. It is tax dodging, and our tax dodgers are fully ethnically representative of our wonderful rainbow tax dodging nation.

Danie:

Two possible scenarios are:
1. We have a lot of people that are asset rich but income poor. There are many that between house and cars and investments less debt have say R5m but that have taxable income of say R500k. Comfortable life.
2. We have a lot of dubious serviceability debt

@Johan-Buys….eish…lets look at your statement and dissect it logically:

Johan wrote:

“The number of wealthy individuals according to the statistics of SARS do not match the reality if I merely look around the fancy neighbourhoods in and around Cape Town”

Wrong.

The reality is, besides the foreign owners in CT who represent a lot of this so called wealth, the balance of these people are locals in major debt !! [ that fancy house ?…bonded..!…that fancy car ?….financed !.. ]

This could apply to most ‘upper class’ suburbs in SA

Please learn that face value means jack

“That alone tells me SARS is still totally clueless”

Sure…and to make it worse, they keep punishing us the FEW taxpayers left, but those in power/elite/connected etc siphoning BILLIONS, get off scott free [ Zuma….Gupta’s and countless others making headlines every day…..ever heard of them ??? ]

“It is tax dodging, and our tax dodgers are fully ethnically representative of our wonderful rainbow tax dodging nation.”

I sincerely hope you are pointing your finger at the politicians/connected etc that I outlined above

Because we can assure you, those countless people slaving away at corporates all round the country, fighting their way to get through traffic every day and then just have tax cleaned out their salary every month, are not ‘dodging’ [ and bear in mind, corporate employment is the majority of working people ]

So, for the majority of these people living in nice suburbs as you accuse, besides that its probably a working family with both partners having to field full time jobs, they are just keeping their heads above water, especially as the economy continues to contract/ taxes for these unfortunates keep getting HIGHER, and while costs INCREASE every day

Everything is on very thin ice – do not be fooled otherwise !

Then the few business owners left, who are OUTSIDE the corporate workforce, the majority of these are stressing daily just making ends meet – and, you can be assured, once you have staff/bank accounts/insurance and plenty debt that most businesses incur, you are on SARS radar, THATS FOR SURE

No dodging taking place there either

So, once you reduce these figures down, the majority of ‘dodging’ taking place then is primarily done by the elite and those in power, for whom the laws do not apply

And the huge shortfall in tax revenue is nothing less than due to ANC’s complete destruction or the economy !…..not those so called ‘tax dodger’s you are trying to gaslight

Further, for those who are ‘dodging’ [ that hard working business owner who has the stress of employing staff/rent to pay/dying economy etc etc ] well, if they are managing to survive by ‘dodging’, then all the better for them !

We salute them, as if you haven’t arrived at the logical conclusion yet that by funding these corrupt and thieving criminals in power via tax, you are technically in fact aiding and abetting in crime

We support a business owner who at least is contributing a service to society any day, as opposed to thieving lying snakes called politicians

So, we say, good for them, these so called ‘tax dodger’s, a new breed of hero !

A great start in trying to regain trust from the taxpayers would be to prosecute Makwakwa, who was suspended for stuffing thousands of Rands into ATMs. Has he even paid tax on these bribes?
SARS needs to heal from within.
Unless they do I will not believe any of the fake sincerity coming from them, and I will continue to believe they are merely a conduit moving my earnings to the corruptoids at the top.

Kieswetter doesn’t get it. It is not only that taxpayers don’t trust SARS (that too) but that we actively despise the cadres who will receive the money we pay over to SARS. One could make a strong case that paying tax is the same as aiding and abetting crime. If you give money to a drug addict who’s begging in the street, you know he’s going to harm himself and commit crime by buying more drugs. Likewise, paying your taxes is knowingly aiding and abetting fraud and corruption.

Agree, that’s why I (as a taxpayer) am also aiding in fraud and corruption.
My addiction will need to stop….this business of ‘taxpaying’ 😉

@Incitatus…..yes…finally…a critical thinker !!

I used to say this along along in my MW comments over the years [ and they often got banned ]

Now it seems I’m not the odd one out anymore

To add to your comment, tax is nothing but legalized theft

Period

Everything is already being serviced by the private sector, such as your schooling/security/medical/education/etc etc and instead of paying tax, we should be just funding these private entities directly for providing these services [ anyway, ever known a govt dept to do ANY service efficiently ?…..]

Wait, we already funding these services directly !!!

Well, there you go – that just blew the argument for tax straight out the window

Where I have a problem with SARS is that through Treasury they consistently increase tax thresholds and collect taxes yet have no responsibility to the tax payer that the funds collected are spent rationally, ethically, and/or supporting those below the poverty line
So SARS is as bad as government as they have no checks and balances in place to curtail the wholesale theft of taxpayer funds through corrupt persons

The POCA and FICA acts as amended, prohibit me from supporting or funding criminal activities and organized crime.

Same old moral high ground stuff, let’s not forget the article

https://www.moneyweb.co.za/news/south-africa/the-taxman-is-coming-for-your-rent/

Basically threatening the little man that he better pay his taxes or else whilst the big wolves roam freely. This was back in July, I am and I am sure most MW readers are fully aware that the wheels of justice turn verrry slowy, but since then and long before then there is not even a smell of charges being laid never mind an arrest, lets not talk about court dates etc..

The best thing SARS can do to “Please protect me from yourself.” is to proactively let the public know what is going on (if at all) with the Gupta’s, Bosasa’s………………etc..

One day we need to talk about how political the appointment of a SARS Commissioner is. All of them cadres associated with the sitting President of the time.

Questionable.

I posted this previously:

Governments can indoctrinate people to go to war and die. These people are called patriotics.

Religions can also do that.

There is NO reason to use this ‘weapon’, coupled with friendly indoctrination, to collect huge amounts of tax from EVERYBODY.

Do away with all these tax laws, tell children and people what is needed, implement a public merit system like China, allow the free flow of capital and cash between RSA and the rest of the world, and we will prosper and grow.

Current SARS employees can be re-trained to assist people in their financial dealings, from primary school level to retired people, and always gave friendly suggestions to each person on how much they can consider to pay, vs the current needs of the government.

Every child should have a tax number, with a Public Merit Number, showing their first payment of R2 at their 6th birthday, thus cultivating social responsibility from a young age.

The public should be able to pay their ‘tax’ at shops, malls, offices etc, and their records should be open to everyone.

Hopefully this system will eventually get rid of money lenders also!

@ mj stellenbosch …your comment has merit

Your first 3 sentences are spot on !

However, a ‘public merit’ system is very open to abuse, especially as you are relinquishing your sovereign rights to the biggest thugs in the world, ie, government [ as can be seen how this system is already being abused in China ]

For those statists that insist on needing help to be governed, the only tax ever allowed, and this only to help maintain a small government/safety and security/basic common infrastructure etc, can be levied via an easy manageable system like VAT, which nets everyone [ from rich to poor ]

Unfortunately though, most governments around the world are bloated, way too large and power hungry, with the majority of tax being used to finance wars/corruption/a lifestyle for those in power and the elite/ squash its own citizens etc

And they are not going to relinquish this power, and tax primarily is the funds used to keep them seated in power [ besides the funding from faceless corporates who fund government too, as can be seen in Capitol Hill, here, and everywhere else ]

Rinse.Repeat

Loved the article. How terrible that SARS has lost so many good people. It was always Revenue who captured the bad guys… that is, until the bad guys captured Revenue!

A reality bite would be to see how much tax is paid by govt employees whom’s salaries are paid out of tax revenues anyway. The growth of employment in the government sector over the years has given a skewed reflection on tax revenues(and employment stats). Simple truth.. I pay you R100 and you give me R25 back of the money I paid you to reflect as tax, but I employ more of you at R100 and collect a whole lot more R25’s to show tax revenue growth. Is this not, in effect, how Ponzi’s work? Ie you need to keep filling the sausage machine. When there is stagnation, or decline in government employment then the whole house of cards comes tumbling down.
The other reality bite would be to look at how much tax revenue SA has chased away to other countries over the last 25 years due to BEE and labour policies. Once again..simple math 1000 000 people earning R300 000 p.a @ 25% That is R75 000 000 000 lost tax revenue.

Just using simple numbers for illustration, but I believe the damage is worse.

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