The South African Revenue Service (Sars) is facing the spectre of a tax revolt as part of the taxpayers’ reaction to a massive looting spree, with the capture of the revenue collector being paralleled to treason.
According to new Sars commissioner Edward Kieswetter, credibility deficiencies that infested the revenue collector as it got dragged into the state capture abyss and years of corruption may result in taxpayers withholding their tax payments.
Speaking at the first day of the annual Tax Indaba, which attracts about 1,800 delegates, at the Sandton Convention Centre yesterday, the commissioner lamented that a tax revolt may ultimately lead to South Africa needing a bailout from the International Monetary Fund (IMF).
He said the credibility deficit had led to the increase in tax avoidance and fraud, which has led to government haemorrhaging billions of rands.
Kieswetter said when public trust waned, “as is the current case”, taxpayers felt morally justified to withhold or manipulate their taxes.
“When revenue collection is undermined, it traps us in a vicious cycle of revenue decline, as we’ve experienced, and consequently the need to go with begging bowls to borrow money, which effectively mortgages our future,” he said.
Kieswetter said the revenue service was in the process of signing a memorandum of understanding with the National Prosecuting Authority (NPA) as it moved to speed-up the process of ridding Sars of corruption, adding there were 1,177 tax-related cases awaiting prosecution and the list was growing.
He said the deal started as soon as he took up the reins and that all that remained was for him to meet NPA head Shamila Batohi to finalise and sign it.
“For us to be successful in prosecuting and bringing to book those who have wilfully perpetrated economic fraud, we have to work together … and always, when there is tax fraud, there is criminal intent behind it.
“Us working together with organisations such as the Special Investigating Unit, other investigative authorities and the NPA will ensure that we work in the spirit of cooperative governance,” he said.
Kieswetter, who took over in May, is facing the mammoth tasked of cleaning up and resuscitating a revenue collector ravaged by maladministration, leading to the drop in revenue collection and tax morale.
He took over from acting commissioner Mark Kingon and succeeded Tom Moyane, who was fired in November last year.
Kieswetter has vowed to restore Sars’ credibility.
Kieswetter was candid about how the agency’s large business centre’s power was clipped during Moyane’s tenure and had lost 140 people with critical skills since 2014.
The tax ombud, retired judge Bernard Ngoepe, said it was frightening that Sars was captured, saying this amounted to treason.
“It is quite frightening actually, considering the role Sars plays, in the economy and revenue… It is treason… I think we went asleep in 1994. I think we assumed, all will go well … and [that] we have arrived. We were wrong. We dropped our guards, we were not as vigilant as we should have been…” Ngoepe said.