Hitting SA revenue estimates will be hard, Kieswetter says

National Treasury estimates R1.58trn of revenue for the year ending February.
Sars Commissioner Edward Kieswetter says tax revenue recovery for the period depends on the availability of resources, which is currently in short supply. Image: Moneyweb

South Africa will struggle to meet revenue estimates this year, even as the new head of the tax agency sets about repairing the “deep damage” that took place under his predecessor’s watch.

“It’s going to be hard” to reach the estimated R1.58 trillion of revenue the National Treasury forecast for the year that ends in February, South African Revenue Service Commissioner Edward Kieswetter said in an interview at Bloomberg’s Johannesburg office Thursday. “The revenue-recovery program depends on whether I get more resources. I’ll certainly keep trying.”

The government has cut the tax agency’s budget amid a fight for resources, hindering the organisation’s ability to do its work effectively. Sars’s R9.45 billion allocation for this fiscal year is smaller than its total spending in the 2014 financial year. Kieswetter, who took over as head on May 1, inherited an institution that suffered “massive failure of governance and integrity” after the appointment of former head Tom Moyane in 2014, a commission that probed problems at the body found.

“The resources that have been allocated to Sars have been significantly constrained, for no other reason that there just is no money,” he said. “Unless we have the resources to rebuild the capability, the project of restoring Sars is at risk.”

Weak economic growth has translated into lower-than-expected tax revenue from both citizens and companies, with a total collection shortfall of R57.4 billion in the year that ended March 31, the agency said in April.

Sars, which employs about 12 500 people, has around 1 000 vacancies, 600 of which are critical, Kieswetter said. Many skilled professionals left the organization under the previous administration, and the new commissioner wants to lure some of them back to boost the agency’s capabilities.

“There isn’t a single silver bullet to fixing Sars,” he said. “I cannot even tell you the full extent of what it means to fix Sars. The tragedy of Sars is microcosmic of the tragedy of South Africa.”

Finance Minister Tito Mboweni will present the mid-term budget on October 30. Additional support of R59 billion for the cash-strapped power utility, Eskom, will probably push the fiscal deficit for this year much wider than the 4.5% of domestic product that was projected in February. Mboweni reiterated that the aid, combined with lower expected tax revenue, will come at a significant cost to taxpayers.

Mboweni “understands there are two sides to the coin of how much money you extract from the economy via taxes,” and is “very mindful” of the implications, Kieswetter said. To raise revenue, the minister will first make sure the agency functions effectively and see that cabinet colleagues “rein in their expenditure” before raising taxes, he said.

The Treasury in August said it has asked departments to prepare proposals on how to reduce expenditure in a way that has the least impact on service delivery.

“Before you look at just adjusting policy, you first have to make sure that the money that’s due to you, you can collect,” Kieswetter said.

© 2019 Bloomberg L.P.

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Perhaps Mr.Kieswetter should go ask Eskom for our money back. He will need a lot less money if the likes of Eskom and SAA are managed properly.

SARS shows the symptoms of the highly contagious socialist disease. Everybody wants the privileges and advantages offered by socialism, but nobody wants to bear the costs. Those who have o fund the socialist ideals emigrate to jurisdictions where property-rights are respected. Only the beneficiaries of the socialist ideals remain behind. We have a world-class revenue service without any taxpayers. We have a world-class social grant system that is running out of funding. We plan a world-class National Healthcare Insurence while there is nobody left to pay the premiums.

We reached our Margaret Thatcher moment – many socialists, no money.

The other big problem besides the heamoraging of the SOEs is that the corrupted money very much escapes the tax net.

Can someone please tell me why this organization PAYS for advertising??????????????????????????????????????????

You are dreaming Teddy.

You know the ANC is doing everything to destroy jobs !

It was always going to be a poisoned chalice – but your pay is good, eh ?

Every story has two sides. For the last ~18 months I have been offering vendors cash for services if I don’t have to pay VAT. I have yet to find one who refuses. No invoice, no receipt. Until such a time as one of the Zuma/ Magashule/state capture clan are physically in prison I will do everything I can to limit my contribution to the state coffers. My tax Rands are squandered and wasted by uncaring thoughtless politicians and never reaches those who need it most. When I see JZ in jail I will reconsider. Until then I won’t play. This is the only way I have to protest the assault on our democracy.

There is a good article elsewhere on MW comparing the difference in the share price growth over the years between Old Mutual and Sanlam and the author puts this down to one reason – allocation of capital. The companies / countries that allocate capital best will rise to the top whereas the companies / countries that allocate capital badly will sink to the bottom. We know where our tax money is going – enough said.

SARS & Treasury need to be reminded that SA currently is a DIFFERENT country altogether….being a shadow of it’s former self.

Even street & town names have changed, to prove it’s a different country now. You cannot expect the same level of collections as in the past.

Now kindly RESIZE the state to be in sync with a smaller private sector, thank you!!

By all means reign in colleague expenditure – start with that hated Cabinet Handbook that allows ministers rent of only R1200.00/m – and then some like Lindiwe Sisulu still argues the toss!
And scrap SAA which is nothing but a government family excess – organise proper public transport for the masses!

More ANC blabber. We might just believe you if you went after all the Bosasa backhands, the VBS backhands etc etc ad nauseum and of course Zuma for perks on the Nkandla hovel.

But of course, nothing will happen, just wheedling threats, demands for more filthy lucre for the ANC elite troughs and a sop to vota’s. All the time pretending that some other agency, the “Zuma regime”, other than the corrupt ANC of course, is to blame.

ANC => Zimbabwe = Human Rights Violation

Kieswetter must first sort out what is happening inside SARS. This is in his control. Some of his group executives are out of control destroying taxpayer relations and staff morale on a daily basis. His Enforcement division especially Compliance is out of control. Just look at recent findings from the Tax Ombud and AG. Nothing is done to turnaround these divisions. Hint start with the Group Executives. How some of these people got to be in control of over 1000 employees baffles the mind. When things go wrong they are not accountable at all.

End of comments.

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