SARS must take some blame for revenue shortfall - Treasury

2018-03-02 12:59 - Lameez Omarjee
Sars building in Krugersdorp. (Website)

Cape Town – The tax revenue gap is not only due to the poor economic cycle as SARS has asserted, but also due to administration and governance issues at the tax authority, Parliament heard.

At a briefing by National Treasury on the public inputs of Budget 2018 at Parliament on Friday, Treasury’s deputy director general on tax and financial sector policy Ismail Momoniat addressed the issue of the revenue gap.

At the Budget Speech last Wednesday, former Finance Minister Malusi Gigaba said the revenue shortfall was projected to be R48.2bn.

Momoniat told the standing committee of finance (Scof) that there are issues in the revenue administration. “It is not true to say it is only the economic cycle. There are administrative challenges. That is why there is a commission of inquiry.”

He was referring to the commission of inquiry announced by President Cyril Ramaphosa to look into administrative and governance challenges at SARS.

SARS has said it will cooperate with the inquiry, which came on the request by the finance minister.

“Looking at the minister’s speech, there’s an important paragraph that deals with the issue of sorting out accountability mechanism at SARS,” said Momoniat.

“I think we have governance issues there and must make sure there are checks and balances.”

Momoniat who was speaking more broadly on corruption at various institutions  said that “when everybody is bad” at an institution it is hard to uncover or prevent the bad stuff happening. “People hide behind confidentiality. Government must reassess confidentiality. Confidentiality must not be an excuse for accountability.”

Tax morality

He added that in the past few years, of the Zuma era, there has been a proliferation of corruption which needs to be dealt with. “The question is do we do something about it as soon as we know about it, or do we wait? The longer we wait the problem gets worse.”

He explained that tax hikes are not received well by the public when they can see that government is not fighting corruption. “We are facing challenges to tax morality and a factor is the fact that we do not act.”

He said that investors were deterred by the limited action in dealing with corruption at state-owned enterprises like Eskom.

Matthew Parks, parliamentary coordinator for trade federation Cosatu who replied to Treasury’s submissions, said that government failed to show that there is a plan to fix the crisis at SARS.

He agreed that the revenue shortfall is not solely due to an economic crisis but due to state capture taking place at SARS.

He also took issue with how workers, particularly the wage bill, are blamed for the budget crisis.

He brought up the R5bn lifeline for Eskom, funded by the Public Investment Corporation. “It feels like the elite have stolen money and the workers must pay back the money.”

UPDATE: This article has been updated with additional comment from Ismael Momoniat to reflect that corruption has been prevalent in other sectors.

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