Sars watchdog to be more independent

But new teeth not sharp enough.

A range of proposed amendments in the Tax Administration Laws Amendment Bill (the Bill) aims to enhance the independence of the office of the Tax Ombud.

The office was established to assist taxpayers who have been unable to resolve specific issues with the South African Revenue Service (Sars), therefore its independence is critical to its success.

However, the influence of the commissioner of Sars and the Minister of Finance has raised concerns about the independence of the office.

In the 2016 Bill, the efforts to enhance the independence of the office include the extension of the Ombud’s term of office from three to five years, the ability of the office to appoint its own staff without having to second Sars employees, and the ability to draw up its own budget – although funding still comes from Sars.

A worrying proposal is that the ombud’s office will in future only be able to review any systemic and emerging issues related to a service matter or the application of the Tax Administration Act which negatively affect taxpayers “at the request of the Minister”.

Tax Ombud Judge Bernard Ngoepe says his office continues to engage the Ministry in this regard. Comments on the proposals have closed already. “These engagements include giving the Ombud power to initiate investigations of emerging or systemic issues that it might identify in Sars.”

Currently the Ombud’s office does not have the authority to initiate investigations.

Judge Ngoepe says the proposal for the five-year term is based on a study of similar institutions within and outside South Africa.

The studies found that, in general, Ombuds were appointed for five years. The longer term would make it easier to recruit people with the right qualifications to the position, he says.

Johan van der Walt, committee member of the South African Institute of Tax Professionals (Sait), says in a submission to National Treasury that the independence of the Tax Ombud’s office is essential to the entity’s success. 

“The amendments take a step towards full independence, but continue to hamstring the Tax Ombud. We fail to see the reason for the continued limitations,” he says.

“In the main, we fail to see why the Tax Ombud cannot review systemic tax issues without first seeking the support of the minister of finance. The Tax Ombud should be free to advise and comment on systemic issues as the Tax Ombud sees fit.”

Van der Walt says the power for the Tax Ombud’s office to freely comment is important, especially in the case of Parliament and public discourse.

“The law cannot be written exclusively by the police of any law, without some assurance that public rights are protected in a meaningful way,” Van der Walt submits.

Participation by the Ombud and his office in public discourse is essential, given the lack of any other meaningful counter-weights in this area, he says.

The recommendations by the Tax Ombud are not binding on a taxpayer or Sars. Treasury proposes a change to its mandate that will force a taxpayer and Sars to provide reasons when they do not accept the recommendations.

These reasons “may” be included in a report to the Minister or the Sars commissioner. According to Treasury, this will ensure that the Ombud is able to review the “reasonableness of the reasons to inform future action”.

Judge Ngoepe says his office is not a tribunal or a court of law. It does not want to complicate the process.

“In most cases Sars has implemented the Ombud’s recommendations. If a recommendation is not implemented, we include that in the annual report to the minister that is tabled in Parliament,” says Judge Ngoepe. 

Judge Ngoepe acknowledges that the lack of power to force Sars to prove reasons for not implementing the recommendations is a weakness in the current legislation.

In its submission, Sait also raises the issue of timelines. The legislation requires Sars to respond to the ombud’s queries, but sets no timelines.

“This lack of any timelines for Sars has become a common theme in the Tax Administration Act. The Act consistently imposes various strict timelines for taxpayers with no corresponding timelines on Sars.”

Sait says this “one-sided approach” to the Act is widely perceived to be “patently unfair” and a cause of common complaint.

The Ombud has identified the non-adherence to turnaround times for objections and appeals as a shortcoming in last year’s annual report.

“There is a general disregard for the timeframes set out in tax legislation and the alternative dispute resolution rules. While taxpayers are expected to strictly comply with the timeframes set out in the dispute resolution procedure, Sars fails to do the same. This non-compliance relates to 19% of all cases accepted by the OTO (Office of the Tax Ombud) for the period,” it reports.  

Sait says it doubts that this approach would prevail if taxpayer rights had an effective voice in policy development.  

The institute would also like to see the powers of the Ombud extended to allow requests for temporary injunctions against Sars action before the courts. Taxpayers, especially those of lesser means, often need protection to hold back the large administrative machinery of Sars in egregious cases, Sait says.

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If the Tax Ombud can’t initiate investigations, how did any get done to be reported on last year? If they can only be initiated if there are complaints, which is how I read the current law, that’s how the Public Protector initiates investigations. What’s the problem?

Typical of the government wanting to micro-manage complaints, in case anything gets done that upsets the glorious leader and his bandits. Pointless having a tax ombud if these changes go through.

In fact the heading of the article is a about f. It’s going to be LESS independent, just a guvmint watchdog.

End of comments.

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