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Sars: Now we start picking up the pieces

The painful process of fixing Sars and regaining taxpayer trust must start with cold hard facts.
Tom Moyane had a great narrative, confidently presented and backed up by figures. Only it proved to be window-dressing. He may have gone, but he has left South Africa to pick up the pieces. Picture: Moneyweb

The date is April 3, 2017.

The venue is Linton House Auditorium at the South African Revenue Service (Sars) office in Brooklyn Bridge, Pretoria.

At the podium is Sars Commissioner Tom Moyane.

“Ladies and gentlemen, it gives me great pleasure to announce that as at midnight [on] the 31st of March 2017, Sars has collected R1.144 trillion, in line with the revised estimate as announced by the former minister of finance in the February 2017 budget speech,” he says.

The audience starts clapping.

“The preliminary results show Sars having exceeded the revised estimate by over R300 000,” Moyane continues.

“Wow,” someone shouts from the audience.

More clapping follows.

“We are also pleased to announce the growth in refunds for the same financial period of 8.6%.”

A bit later, Moyane says he would also like to address the elephant in the room – refunds. The frustrations of taxpayers about outstanding refunds have not gone unnoticed.

“Sars has not changed its approach to refunds. It continues to implement its systems and processes that are tried and tested, which have been in place for several years.”

Later, he adds: “It is with this in mind that Sars has put in place systems and processes to ensure minimum delays in payments of refunds.”

A great narrative, confidently presented and backed up by figures.

Only it proved to be window-dressing.

On September 4, 2017 the Tax Ombud, Judge Bernard Ngoepe, finds that Sars unduly delayed tax refunds.  

In October 2017, the Medium-Term Budget Policy Statement (MTBPS) shows that tax revenue may fall R51 billion short of earlier estimates.

On March 19, 2018, President Cyril Ramaphosa suspends Moyane amid a deterioration in public confidence and as public finances suffer.

By October, the MTBPS highlights a backlog of value-added tax (Vat) refunds. An underestimation of refunds due has led to an excessively optimistic view of revenue growth. The Vat refund estimate is revised upwards by R9 billion and roughly R11 billion has to be paid out to clear the backlog in the credit book.

Which brings us to April 1, 2019.

Again, the venue is the Linton House Auditorium.

Moyane is absent from the podium. He was fired towards the end of 2018. Yet his legacy is almost tangible.

Sars announces that it missed its revised revenue collection target for 2018/19 by R14.6 billion.

There is no clapping.

Ismail Momoniat, head of tax and financial sector policy at National Treasury, says the legacy of the last few years will take time to reverse.

Poor economic growth, lower compliance levels and the Vat refund backlog have added insult to injury.

If Sars had continued with its previous practice of holding back refunds, it could have reached its target.

“In fact, there seems to have been lots of artificial playing around to try and make sure the target was reached,” Momoniat says.

A sober narrative, backed up by rather poor figures.

But it may just be the start of a difficult turnaround at Sars.

To be successful, Sars will have to regain taxpayers’ trust, something that will be difficult given the deception of the last few years.

When new commissioner Edward Kieswetter joins Sars on May 1, he will not only have to deal with a dysfunctional operating model, low staff morale and pressure on tax collection, he will also have to regain taxpayer trust.

Kieswetter knows it will be an uphill battle but seems to have the right mindset.

When asked why he volunteered for such a difficult job in a recent interview, Kieswetter stressed the need to work together to make South Africa’s young democracy work rather than criticising from the sidelines.

He said his biggest priorities will be to give Sars employees hope and to restore their pride in the organisation, and to rebuild public trust.

This will be a tough ask that needs to start with an open and honest conversation.

Targets won’t be exceeded. There won’t be applause.

But the painful process of fixing Sars must start with the cold hard facts.

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Sorry Mr K. My trust might begin to be rekindled when I see the high profile corrupt thieves landing up in jail and their assets forfeited to the State. Until then you can count on the fact that I will not be joining you in “working together”. My focus will be on protecting as much of my hard earned assets for me and my family.

Stealing All Remuneration Sadly.
Ably managed by Mr K and the Kingons.

In the long gone past The Readers Digest had pearls of wisdom at the bottom of each page, such as: The government (read also SARS) is like your stomach, if it is working well, you do not know you have it.
I really don’t care if SARS has problems or whether it meeets its targets.
I want SARS to be fair in its deaings with all its customers, to collect its onerous government taxes without any favouritism and to pursue those that try to screw it with the full force of the law, and regardless of being cadres of the ANC. (And to let us know which high profile crooks have been caught out.)

Once a refunded is disputed SARS has 60 working days (Three months) to deal with a dispute. If this his disputed twice half a year.

“we start picking up the pieces” – wording wise the heading sounds very similar to the song “picking up pebbles and throwing them into the sea” – all dreaming about the good all days.

At least “protect me from yourself” has temporarily vacated her office. Lets give SARS the benefit of our doubts.

Shame guys, all we need to do is give SARS employees hope. What a load of…

Go back to sleep South Africa, the ANC and SARS has your best interests at heart.

Love the Bill Hicks comment

The hard truth is that trust takes years to build and minutes to destroy. And once destroyed it is extremely difficult to rebuild. The further hard truth is that, unless you are politically connected (read Juju and his disappearing tax problems), you’re out on a limb if you evade tax. In some professions it can mean the end of your career. And then there is this crazy invention called “impermissible tax avoidance”. The contra fiscum rule does not exist anymore.

A week or so ago, SARS said that “the holiday was over” (with reference to tax compliance). Again…this type of threat is the WRONG approach, if you desire the support of the taxpaying public.

In the Trevor Manual “heydays” (when the economy was firing on all cylinders) there was great communication between SARS and the public, and people had the general impression that their tax money was used sensibly / to the fair betterment for all.

Then Zuma and cohorts arrived…to err, uhm..transform the picture.

What the taxpaying public now want to see is widespread prosecutions (and convictions) of the main architects of state-capture. If nothing is done, the message to the public will be “your tax collections will continue to get wasted”. So people will not have sympathy with SARS.

The ANC can just as well start with the prosecutions, if 8 May goes well for them…

What SARS & Govt does not understand, is that South Africa is a much smaller country (in economic terms) what it used to be say 10+ years ago.

Thanks to Zuma, sons, family & friends, and extended friends, esteemed colleagues and cadres getting fat at the feeding trough, they were successful in TRANSFORMING the economy. The majority voted for change…democracy in practice (accepted, no arguments against that)

Now that tax collections are (also) ‘transformed’ to a lower base, now suddenly NOBODY IN GOVT CAN UNDERSTAND WHY…?!

The answer is: we’re now a smaller country. One cannot compare SA today, to what is was 10+ years ago. It’s like two different countries! Names of towns also changed…yes, its real…along with smaller economy.

SARS/Govt collection targets are set too high…it’s based on a past country that has been. Viva Transformation, viva!
Collection targets needs to be adjusted/transformed down in line with a 15-20% smaller economy.

Is Tax base is Eroding; thereby decreasing targets?

1) Extract from AdvTech analysis …

“Advtech’s situation is exacerbated by its heavy exposure to the high-fee segment where many parents are migrating or trading down to cheaper schools.”

2) DSTV premium subscribers is falling

3) Vehicle sales depressing

Thats the one thing that SARS till today could not work out or simply unable to understand: If the economy goes down – down goes the tax innings generated by it, direct or indirect with it, even if all the tax payers of the previous year is still paying their tax. The governments / anc solution to this problem is just to up tax tariffs(also direct or indirect) and all of a sudden they are very much concerned about ones health with tax like sugar tax etc – biggest trash I’ve ever heard of. local authorities easily put up rates & taxes based on one’s home “estimated thumb sucked market value” – while actual house prices came down by an average of 21%(durban area) there is no downward change in rates & taxes, +/- 40% of the fuel price is also tax in one or other way, but never used for what it was meant for originally

The SARS employees recieved a 8% increase. Perhaps they are motivated to do their work properly and accurately? Yes?

‘All the King’s horses and all the King’s men, couldn’t put Humpty together again.”

End of comments.





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