Political deafness is standing in the way of the creation of a structure that will ensure the complete independence of the Office of the Tax Ombud.
Tax Ombud Judge Bernard Ngoepe has tried to engage with finance ministers Nhlanhla Nene, Malusi Gigaba and most recently Tito Mboweni, about a government report recommending ways to ensure his independence. He has had no response from government.
The report – done at a great cost to taxpayers by the Government Technical Advisory Centre, an agency of National Treasury – has been with the finance ministry since June 2018.
The agency recommended two options for a new structure that will lessen the tax ombud’s dependence on the South African Revenue Service (Sars).
Currently, the ombud’s office appoints its own staff, but its budget is determined by the minister of finance and ring-fenced within Sars. The commissioner of Sars is its accounting officer. The office requires the approval of the minister if it wants to investigate systemic issues at the tax collector.
The Tax Administration Act established the Office of the Tax Ombud in 2013. The same act gives far-reaching powers to Sars. It can attach and sell a taxpayer’s assets, obtain a preservation order or liquidate or sequestrate an estate.
On Tuesday Ngoepe took his fight for independence to a Mail & Guardian critical thinking forum in Johannesburg, where he voiced his determination not to allow political deafness to detract from his ultimate goal.
He said he has the full support of Sars. He also received full support at the forum from tax practitioners, civil society, tax industry bodies and taxpayers.
Pieter Faber, tax executive at the South African Institute of Chartered Accountants, says we should not allow political deafness to decide our future or detract from efforts to impact on the lives of everyone.
Wayne Duvenhage, CEO of the Organisation Undoing Tax Abuse (Outa), said during a panel discussion that it is not viable to have the organisation you are supposed to hold to account have a say in your operations.
SA’s political situation is very different from other jurisdictions such as Australia, Canada, the US and Mexico where there are similar oversight bodies with perceived and real independence protecting the rights of taxpayers.
“In SA we have seen how much damage the abuse of power causes,” said Duvenhage. “It is therefore critical that oversight entities are extremely independent. We are relying too much on personalities in these bodies [referring to the past and present public protectors] and not enough on stringent processes that enables independence.”
Balance of power
The Davis Tax Committee has looked at the power balance between Sars and taxpayers. In its final report on tax administration it emphasised the need for a bill of rights that is “enforceable and with legal effect”.
This is necessary to guarantee the rights of taxpayers and ensure that Sars takes responsibility for its dealings with taxpayers. The committee looked at various models and suggested the gradual implementation of the Mexican model.
An independent public body known as the Procuraduría a de la Defensa del Contribuyente (Prodecon) assumes the role of protecting and promoting the defence of all taxpayers in Mexico.
The Davis committee recommended that the tax ombud be given powers to enforce the taxpayer bill of rights. That report and its recommendations are also gathering dust.
Deborah Tickle, associate professor at the University of Cape Town and member of the Davis committee, says Sars needs its wide powers because there are people who are not paying their due amounts of tax.
However, the powers available to Sars are so extensive that people who are trying to be compliant and want to be treated as the law requires are feeling that they are being treated unfairly. That is where the role of the tax ombud becomes critical.
Ngoepe said that as a matter of “pure courtesy”, and as a demonstration of faith in institutions that the government itself has created, it cannot practice political deafness.
The financial costs of instances where companies had to close their doors and people lost their jobs because of the withholding of legitimate tax refunds or where bank accounts had been frozen by Sars should be measured against government’s political deafness, he added.
“I am not going to give up the fight to make sure that the rights of taxpayers in this country are properly respected through ensuring that this office is on a proper footing.”