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Cape Town - There is a need for a separate inquiry to examine all the relevant legislation affecting the running of the SA Revenue Service (SARS), according to a report on the tax system submitted to Finance Minister Malusi Gigaba by the Davis Tax Committee (DTC).
Gigaba had granted the DTC permission to publish its reports, which it had earlier submitted to him, on Monday.
The DTC is, however, advisory in nature and can only make recommendations to Gigaba. The finance minister may take the committee's recommendations into account when making announcements as part of his normal budget and legislative processes.
All resultant announcements by Gigaba will then be subject to the normal consultative processes and Parliamentary oversight.
According to the DTC's tax report, all the relevant legislation affecting the running of SARS are collectively "fundamental to the invariably delicate relationship between SARS and the taxpayer".
For this reason the committee considers that a separate inquiry is needed to examine the inter-relationship between the Constitution of the Republic of South Africa Act; the Public Finance Management Act; the SA Revenue Service Act; the Tax Administration Act and the Customs Duty Act.
The aim of this new study would be to ensure all the relevant legislation "fits together" and that no one piece of legislation is incongruent with another.
Read together, the legislation must also "prompt optimum levels of good governance in SARS", according to the committee.
The DTC points out significant changes had been made to the SARS Act in 2002. The president was given an unfettered discretion to appoint (and on that basis also dismiss) the SARS commissioner, while the role of the minister of finance was diminished.
The DTC presumes that the justification was to enhance the independence of the office of the commissioner and protect him or her from interference, "which would otherwise have been generated by the minister of finance". Before the amendment, the minister possessed both the power to appoint and dismiss the commissioner.
The nature of the SARS advisery board was also changed so that the minister of finance may appoint one or more specialist committees to advise the commissioner and the minister on any matter concerning the management of SARS resources. These matters may include asset management, human resources and information technology.
There was, therefore, no longer a central board and the mandate of the advisery committees was clearly different and couched in narrower terms than that which initially appeared in the act, according to the DTC.
Alternatives
The DTC emphasised that it is offering a number of alternative proposals for "urgent consideration" in order to promote accountability and transparency and ensure a governance structure that promotes the core mandate of SARS.
In the view of the DTC there is no reason why the SARS commissioner should not be appointed in the same fashion as the public protector. The public protector is appointed in terms of the Republic of South Africa Constitution Act. It provides that the President, on the recommendation of the National Assembly, must appoint the public protector.
In turn, the National Assembly must recommend persons nominated by a committee of the National Assembly, proportionally composed of members of all parties represented in the National Assembly and approved by the latter body by a resolution adopted with the supporting vote of at least 60% of the members of the assembly.
An alternative proposal, according to the DTC, would be to revert to the position where the minister of finance appoints the SARS commissioner.
The committee strongly recommends the creation of a board to supervise the operation of SARS "with the clear objective of promoting the integrity of its conduct as well as to ensure that it implements systems to collect revenue as fairly and efficiently as possible".
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