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Sars damage will linger for years to come – Kieswetter

Tax revenue shortfall surges to R57bn.

The rebuilding of the South African Revenue Service has begun, but the damage suffered is incalculable and the effects will linger for years to come. So says Sars Commissioner Edward Kieswetter, who has been in the job since May.

The tax collector has lost 2 200 of its employees since 2014 and a culture of fear and mistrust in the leadership still prevails. Around 400 professionals involved in compliance investigative audits left Sars and its Large Business Centre lost more than 130 people with highly technical skills.

Read: Taxpayers want more efficiency, trust and credibility from Sars – survey

Kieswetter delivered the keynote address at the annual Tax Indaba in Sandton, which looked at the role that participants, intermediaries and consultants played in state capture and the hollowing out of state institutions such as Sars.

The tragedy

Kieswetter says Sars needs to be frank about its own inefficiencies and the tragedy of the current situation it finds itself in.

“It pains me that there are still those who perpetuate a denialist narrative about the fact that Sars had suffered a significant blow since 2014. It is even more distressing that there are still those who continue to undermine the efforts to rebuild Sars.

“They do this to our collective detriment.”

Sars was the target of deliberate capture that supported a narrow self-serving intent by firms such as Bain, Gartner and advisory firm KPMG.

These firms were appointed and paid millions – to fix something that was never broken. This led to a world-class IT system being neglected to the point where it was merely a matter of “keeping the lights on”.

The capture of Sars led to a breakdown in governance, loss of confidence and trust, and the subsequent decline in revenue collections.

Deputy finance minister David Masondo says the period of institutional instability coupled with slow economic growth has led to an increase in tax revenue shortfalls – from R7 billion in the 2014/15 tax year to the latest shortfall of R57 billion.

One of the key lessons of the last 10 years is that policies and institutional designs are not sufficient to enhance economic growth, he adds.

“This can be easily dismantled if powerful forces with predatory agendas are present in society.

“We need a coalition of active citizenship that is committed to ensuring that our institutions are protected.”

Masondo says powerful forces can regain their strength and may recapture the state institutions if civil society is weak. If South Africa did not have such a robust civil society, the level of state capture could have been much worse, he adds.

Integrity

Kieswetter says that a strong and capable state is needed to combat the stubborn prevalence of poverty and address inequality and unemployment. “Fundamental to building a capable state is fiscal integrity.”

This requires a well-functioning revenue authority that provides government with the ability to provide goods and services without its debt growing out of control.

“Our flag and our anthem will mean nothing if we have to hand away our sovereignty to multinational funding agencies who will effectively own us once we lose our financial independence.”

It is therefore incumbent on all South Africans to make sure the tax system remains one that is characterised by integrity, effectiveness and is known for professional engagement with taxpayers that is beyond approach.

Sars has been working on 17 cases in the so-called illicit economy where there is a suspected tax compromise of R30 billion. It is also working on 16 transfer pricing and international tax cases where it is of the view that there is a tax risk of R3 billion.

Kieswetter says Sars is working closely with the National Prosecuting Authority and currently has a backlog of 1 177 cases waiting for prosecution.

He also referred to the culture of fear and intimidation that was prevalent during the reign of former commissioner Tom Moyane.

It resulted in unacceptable service and even bullying by auditors of taxpayers and tax professionals. “There can be no excuse for poor taxpayer treatment. This behaviour is unacceptable, unprofessional and even unethical.”

Kieswetter cautions against any talk of a tax revolt, saying it would put the country on a slippery slope that would further undermine the building of a credible state and functioning democracy.

“It would contribute to lawlessness and decay that would serve nobody’s interest.”

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Hey SARS, ag don’t you worry, man. Look at the bright side. With all these taxpayers that have emigrated, or are busy emigrating, you won’t have a lot of audits to do, or tax to collect. To keep busy, you can FICA the unemployed so long. Register them for e-filing or do a lekker road show where you tell them how to complete their tax return once Cyril’s New Dawn descends on us and they land their first job in 2077 aged 87.

What I still can not understand is how does the government (anc) understands how the economy works – certainly one must know that when the economy is semi-down-and-out like in south africa for how many years now, that the tax generated by it and paid over to sars will for sure be less. (directly due to an incompetent government that does not understand what is the difference between stimulating the country’s economy and creating cadre jobs)

Who says SARS has now stopped bullying taxpayers?

Talking about Bain, Gartner and KPMG’s capture of SARS, what sanction applied to these ‘thug’ companies? Have they repaid any ill-gotten gains they made??? Have the company representatives been fired and brought to book?

SARS, your BIGGEST enemy right now are the 2000+ ex-employees out there,

working against you,

knowing how to play you,

beating you at your own game.

WE, the normal-law-abiding-tax-paying-citizen, are still paying our taxes as we normally did and will do.

Churchill said this decades ago.

“For a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”

This lot is still at it. Hahaaa.

Meanwhile back at the ranch, while these droning talk shops by His Royal Highness continue, there is little evidence to show fo this much-talked-about cleanout!

“Sars damage will linger for years to come – Kieswetter”, “Therefore keep me in this job for that long – Kieswetter”.

Show us the Zuptas tax returns and we might have sympathy.
Until SARS seriously investigates and claims the taxes due by those who have robbed this country, you cannot expect cooperation from the exhausted honest taxpayer.

Absolutely correct….the root cause of tax morality problem SA is facing (Zupta et al, corruption on grand scale, and little consequence…not even from SARS). Nkandla fire pool tax deduction accounting…

The whole ANC-leadership to set tax morality example. Fish rotting from the head.

I agree we need to fix things. I am prepared to help but it’s not going to be a very “lekker” exercise for some guys in SARS. However, if you guys are really serious give me a call. Regards

Nothing has changed. Submitted my return via e filing on the 1st day. They had glitches with new system which they should have tested up front. As a pensioner I am selected for manual intervention. Due back money so almost 2 months from filing.

WJS

@Wally. Based on past experience (as Tax Prac), try to avoid the first day or three of the commencement of Filing Season to submit (allow others to fall to the first enemy bullets 😉 Plenty of system bugs that whole week…drove me insane.

…otherwise submitting first, you’ll be like a WW2 infantry man…in the front row of battle facing accurate SARS machine gunners! Like the first troops exiting the landing-craft on D-Day 6 June 1944, Omaha beach, “Dog Green” sector 🙁

On sober note, when one get that “selected for manual intervention” message, after submission, typically in majority of cases it has to do with an “outstanding tax directive relating to a lump-sum withdrawal” you’ve made (anywhere between Mar’18 – Feb’19). In case SARS later choose to audit (when the assessment gets issued), in the meantime while waiting, try to obtain from the Pension/Provident/or RA Fund a copy of the relevant IRP5/IT3a tax cert pertaining to your lumpsum fund withdrawal (or fund transfer) from the originating fund’s administrators. This you upload, with rest of your supporting docs. And also advise the fund to ensure that they re-sent the “tax directive info to SARS”, as it wasn’t received.

May this hint hopefully help to avoid an adverse audit. Hope this guidance will act like covering “air support from friendly P51 Mustangs above” as you fight your way forward.
No pensioner needs to die on the beach…

Hi Michael,
Thanks for the info and noted. It has been sorted. I received a Pension surplus and yes they called for a Tax directive which they received from my Company.i should have requested before I filed. Know for next time.

Kind regards,
Wally

Good to hear Wally! 🙂

(Glad you made it safe through your D-Day beach landings 😉 with only a scratch.)

In a society where everyone is above the law, why would anyone still bother to pay tax? It might be against the law to evade paying tax, but so is stealing, rape, murder, etc etc etc. No one is held accountable so highly unlikely you would be held accountable for not paying tax! Hoohaa there goes SA, another African disaster!

…you refer to the “social contract” between the state (for providing rule of law, protection of property rights, etc) and its citizens (which pays the tax & respecting laws) which leads to mutual benefits.

Still waiting for an apology from the ANC for the damage they have done to this country, the jobs lost, the billions looted… untold harm caused by one party and one party alone!

Best of luck with that. Most of the ANC, its appartachiks and its chattering class supporters; Peter Bruce, Melania Verwoerd, Max du Preez et al try and pretend that the “Zuma regime” was somehow not part of the current ANC. Reality is that the current boss capo was the junior throughout the Zuma reign and many of the present “ministers” were in the ANC Zuma government. Zim style but spinning flat out by the new Bell Pottingers.

I hope Kieswetter will be reading these comments. The one by ‘Danie from Parow is a beauty’.

On what grounds is Kieswetter cautioning us against any talk of a tax revolt? Sounds very “Lenin” or “Mugabe” to me…

I would appreciate to see up to date tax returns of every “public servant” in Parliament, please. Lets see who is really being served….

I’m a ninth generation South African who has been holding off leaving SA. Although I’ve been tax exempt in SA, in the last 20 yrs I’ve spent a little over R15 000 000 in SA. Due to new tax law next year and the lack of action on any of these state capture charges I’m leaving next Feb. I know 18 guys in my industry doing the same. It’s too late now, there is no one in SA with the technical skills to fix any of the infrastructure, regardless of ANC’s bloviating.

These guys talk as though someone else is responsible for the slight misadventure of SARS and the State. They now expect civil society to assist in fixing THEIR problem.

Maybe they are just as clueless when it comes to judging how sick and tired the middle class has actually become of them.

If they think the poorest of the poor is their biggest problem? Well I beg to differ.

I think we require action on those SARS systems. We have been hearing for years that they are imploding. When will action be taken? Will they wait until it falls apart completely?
(or is it a question that the contract to fix must go the right cadre??)

Get another “please save myself from you” cadre….they will certainly know how to ‘fix’ the SARS systems!??

I’m sick and tired to hear about turn around strategies, damage will last for years etc. The situation in SA is as expected under the ANC, so there is nothing to turn around. This is the way it will be, unless we get an electorate waking up to reality and even if they do, the ANC will learn from ZANU-PF how to stay in power.

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