When advocate Eric Mkhawane first walked into the Office of the Tax Ombud about five years ago, he expected to find a fully functional operation.
Instead he found a small team and not much else. The man who had just been appointed as South Africa’s first Tax Ombud, Judge Bernard Ngoepe, was working with just two staff members. The latter had been seconded from the South African Revenue Service (Sars) to help set up an office that could resolve service, procedural and administrative matters between Sars and taxpayers speedily, amicably and free of charge.
“I thought to myself, in an office like this, you don’t have a job description,” Mkhawane, CEO in the office, recalls. “You walk in. If it is time to wash bottles, you wash bottles. If it is time to resolve a complaint, you do.”
The idea of setting up such an office had been a long time in the making. The appointment of a Tax Ombud was first mooted by the Katz Commission in 1995. In 2002, the Sars Service Monitoring Office was set up to improve complaint resolution. By 2010, a proposal for the establishment of a Tax Ombud office found its way into tax proposals and in October 2013, the office opened its doors.
In a video compiled to showcase the history of the Ombud’s office, one of the first two employees, Nthabiseng Nene, recalls that she received the first complaint via e-mail on October 13.
“Remember, we don’t have staff. We don’t have a system. I don’t have forms. I had nothing with me.”
Fortunately, Nene had previously worked at the Sars Service Monitoring Office, and used her prior experience to get a history of the case. With the assistance of a senior manager, the case was settled on October 25 – 10 working days later.
Also speaking in the video, acting Sars Commissioner Mark Kingon says the establishment of the office did add complexity in dealing with complaints, but as the journey progressed, it got easier.
It got off to a rocky start, but the relationship has improved in the recent past, he says.
Today the office has 44 employees.
Over the last five years, the number of annual contacts has skyrocketed from 670 to over 17 000. The office previously admitted that capacity has been an issue.
Despite positive movements there are still concerns about its independence, mandate and powers.
Although its budget is ring-fenced within the general budget of Sars, the commissioner of Sars is effectively the accounting officer.
Mkhawane says getting legal status is a work in progress and that the office has approached the Government Technical Advisory Centre within Treasury to come up with various options.
Yet the Ombud has not shied away from taking a stance. After a public outcry, it requested permission from then-finance minister Pravin Gordhan to investigate delays in the payment of tax refunds as a systemic issue and found that Sars unduly delayed payments in certain instances.
Ngoepe, usually soft-spoken and measured when commenting on controversial issues, is critical of a provision in the Tax Administration Act that requires him to obtain permission from the minister before he can investigate systemic issues.
His office previously asked for permission to investigate issues that it regarded as systemic – meaning the underlying cause for various complaints – but, as a compromise, was only granted approval to probe after the minister had given the green light.
Ngoepe says they have made further representations to remedy the situation (including to Parliament) so that it can be allowed to investigate of its own accord, but the process has been frustrating.
“I’m beginning personally to think that if our efforts don’t bear fruit, I’m going to advise the stakeholders to test the Constitutional validity of this single provision.”
However, Ngoepe says he is trying to resolve the issue in a civil manner.
Asked what the office hopes to achieve in the next five years, Mkhawane stresses that structural independence is long overdue.
“We want this country to have a reputable and a trusted institution that is not compromised in any way. Perceptions count a lot and that is where we want to go.”
But are taxpayers in a better position than they were five years ago before the establishment of the Tax Ombud’s office?
Patricia Williams, partner at Bowmans, says taxpayers are definitely in a better position. In addition, taxpayers should also expect that the position will strengthen further as the ombud’s mandate is extended.
In this regard, there are some key shortcomings, she notes.
She echoes Ngoepe’s sentiments that it is legally problematic that he must first ask for approval from the minister of finance to investigate systemic and emerging issues.
“The Tax Ombud is also in consultations with Sars regarding an agreement, which has been requested, to include timeframes within which Sars will implement the recommendations of the Tax Ombud, in the circumstances where Sars does not disagree with the recommendation,” Williams adds.
The most significant area where taxpayers are hopeful that the mandate will be extended is for the Tax Ombud to be effectively made the gatekeeper of taxpayer rights and given legal standing to litigate on behalf of taxpayers. Taxpayers are also hopeful that the Tax Ombud may become more involved in tax policy aspects and serve as an independent voice of reason.
Williams says that similar offices in other countries experienced growth, and their mandate increased over several years. The expectation is that this will be the case in South Africa as well, provided that tax practitioners and taxpayers alike keep drawing attention to the visible areas of development for the Tax Ombud, and requesting Parliament and National Treasury to address these issues.
“We have a constitutional right to participate in policymaking and we need to exercise this right in a socially responsible manner to help improve the Tax Ombud’s ability to protect taxpayer rights in appropriate situations.”