Revenue drop necessitates tax law changes - Treasury

Cape Town – The significantly lower revenue collection of R30bn requires National Treasury to make changes to the Income Tax and VAT Acts to ensure smooth tax administration and optimal revenue collection.
 
In a briefing to Parliament’s standing committee on finance on Wednesday, Treasury deputy director general Ismail Momoniat said certain sections in South Africa’s tax legislation allow Finance Minister Pravin Gordhan to put regulations in place prescribing, among other things, the type of information he needs from the commissioner of the South African Revenue Service (SARS). 

“Both sections are made explicit in relation to pointing out that the minister of finance may make regulations in relation to information that he deems necessary to obtain from the commissioner to ensure transparency and reporting on tax collection,” Momoniat said.
 
In a media briefing preceding his 2017 Budget Speech on February 22, Gordhan said he was concerned about SARS’ revenue collection capabilities. He repeated the stance during a parliamentary briefing the next day, saying it was his job to see that SARS commissioner Tom Moyane is doing what he is supposed to do. 

“SARS is the revenue administrator and it must do its work in a manner to support government’s fiscal objectives. I’m only doing my job and hopefully they’ll begin to do their jobs as well,” he said at the time. 

READ: Don't personalise Treasury/SARS issue - Gordhan

Moyane, however, hit out at Gordhan at a press conference last Friday, saying he regretted the fact that Gordhan blamed SARS for the R30bn deficit. Such intimations, Moyane said, posed serious challenges to the overall credibility and effectiveness of the revenue collector.

“It is unfortunate that this happens at this particular time with only five weeks away from the end of the 2016/17 financial year,” Moyane said. He provided a number of reasons for the drop in tax collections. 

According to him, custom duties were dragged down as a result of lower imports, while VAT collection dropped due to an underperformance in import VAT collections. 

READ: Zuma to intervene in Gordhan/Moyane stand-off 

The relationship between Gordhan and Moyane has been strained for more than a year, starting from the surfacing of reports of the alleged existence of a so-called rogue unit within SARS, as well as reports that Moyane laid charges against Gordhan. 

Moyane has denied this. 

The relationship between Gordhan and Moyane has deteriorated to such an extent that Moyane called on President Jacob Zuma to intervene. 

READ: Zuma to intervene in Gordhan/Moyane stand-off

BusinessLive on Thursday reported that the proposed amendments to the Income Tax and VAT Acts would allow Gordhan to prescribe regulations regarding the duties of people employed to administer the Income Tax Act, in order to ensure better tax collection and transparency.