New law may 'break' taxpayers
Cape Town - If it is not introduced with circumspection, the tax administration bill could break the taxpayer’s spirit, said Johnny Eliades, a member of the Association of Chartered Certified Accountants (Acca) and a tax practitioner, on Tuesday.
In the public hearings related to the bill before the parliamentary standing committee on finance, Eliades said that one of his clients had owed the South African Revenue Service (Sars) R1.5m.
It was a black entrepreneur whose business had started out small but had grown briskly over four years and had begun to create jobs.
Sars had begun extracting the money directly from the client’s bank account, even though he had offered to repay the debt at a rate of R50 000 a month so that he could continue to pay his employees. He had even offered to pay R100 000 a month, but Sars had refused to budge.
Eliades said in another instance Sars had taken seven months to repay the R600 000 it owed a client, while at the same time pressing the client for his VAT payments.
Committee chair Thaba Mufamadi (ANC) said that Eliades’ examples were relevant in the light of job creation and the impact of the recession on small businesses, and that third parties such as the employees of a taxpayer should not be inconvenienced. He said National Treasury should take this into consideration.
Advocate Steven Budlender of the Victoria Mxenge advocates’ group said the bill was not unconstitutional.
This followed criticism that aspects of the bill might be unconstitutional – such as Sars’ right to search a taxpayer’s property and seize goods without a warrant, as well as the "pay now, argue later" principle.
Budlender admitted that Sars had asked him – for a fee – for his opinion on the constitutionality of the bill, but stressed that he was convinced the bill was not unconstitutional, no matter who had asked his legal opinion.
In his view at least 20 wealthy industrial countries grant their tax authorities similar or even larger powers.
Stiaan Klue of the South African Institute of Tax Practitioners said that aspects of the bill should not be included simply because they represented international practice.
Klue however congratulated National Treasury on its efforts to simplify and consolidate tax legislation.
The bill provides for a tax ombudsman, but in more than one presentation tax practitioners asked for greater powers for the ombudsman.
In terms of the bill the ombudsman is funded by Sars and Sars personnel would work there.
The ombudsman could therefore not be considered independent, it was said. The ombudsman should also have to account to the standing committee on finance, said Klue.
Kyle Mandy, head of PwC audit group’s tax unit, said the principle of an ombudsman was welcomed, but the ombudsman would not have sufficient authority to force Sars to do anything.
In the US the “taxpayer’s advocate”, an institution looking after the interests of taxpayers, for instance has the power to serve, on behalf of a taxpayer, an “assistance order” on the US revenue service.
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