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Johannesburg - Tax practitioners have welcomed the appointment of Mark Kingon as the new acting SA Revenue Service head, describing him as a "tax veteran".
Kingon, who has worked at the tax agency for 34 years, replaces Tom Moyane, who was suspended by President Cyril Ramaphosa on Monday night after he refused to resign.
“We all know him, he’s a tax guy … he’s been the one senior guy who’s always been responsive, you could email him directly, from a practitioner's perspective, we’re smiling”, Jerry Botha, managing partner at Tax Consulting South Africa, told Fin24 on Tuesday morning.
Deloitte’s managing partner for tax and legal Nazrien Kader described Kingon as a "very old veteran at SARS, one of the last surviving people who worked under Pravin Gordhan”.
Ramaphosa suspended Moyane on Monday evening "immediate effect", pending the institution of disciplinary proceedings.
In a scathing letter to the former tax agency head, dated March 19 and seen by Fin24, Ramaphosa told Moyane that developments at the revenue agency under his leadership had resulted in a “deterioration in public confidence in the institution and in public finances being compromised”.
Kader said she wasn't surprised to see the commissioner first being asked to resign, and then suspended.
“What was very disconcerting was the uncertainty [at SARS], caused by the restructure and the vacancies at senior levels open for months,” she said.
Under pressure
Botha said that, over the past few years, SARS had been under “huge pressure” to up its revenue collection. But while the organisation became more aggressive about collecting tax, at the same time it started to take far more effort to receive a refund from the revenue agency, he said.
“From a tax practitioner's perspective, the process had become far more frustrating”.
Botha added that the difficulties in receiving tax refunds, which both the Davis Tax Committee and the Tax Ombudsman Judge Bernard Ngoepe had flagged, led to a “slippage in tax morality”.
However Kader disagreed, saying there’s “no evidence of a tax revolution”.
Former Finance Minister Malusi Gigaba, in his February budget speech, had announced a R48.2bn revenue shortfall for the 2017/2018 financial year.
This was a R2.6bn improvement from October 2017 projections, due to improved economic growth.
Gigaba announced R36bn in additional tex revenue for the 2018/2019 financial year in his maiden budget, including a one percentage point increase in the VAT rate.
He also announced some R85bn in spending cuts over the next three years to reign in the budget deficit.
Confident
Botha said that he remained optimistic that standards at the revenue service would improve as it still has many “competent” people.
Kader, meanwhile, suggested that the organisation revert to what he said were previous successful methods of collecting revenue.
“[We] would like to see the return of the Large Business Centre at SARS, and a strategy of going 'back to basics'. Mark has the experience to do it,” he said.
At the same time as the leadership changes at SARS, the revenue agency and SA businesses are gearing up for an increase in the VAT rate from 14% to 15% on April 1.
“Large VAT payers such as banks and retailers are in a frenzy to get their systems up and ready” ahead of the deadline, he added.
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