Looking back over the week of the Tax Indaba, an annual event that brings together regional controlling bodies, tax practitioners, tax professionals and the South African Revenue Service (Sars), I am left feeling dissatisfied. No, not with the excellent organisation of the conference, nor with the interesting discussions, but that there is still so much left unsaid.
Despite Sars acting commissioner Mark Kingon seeming to offer an olive branch – “Sars is committed to the fair treatment of taxpayers … we are committed to changing perceptions by doing our work as expected, with integrity and within the framework of the law without fear or favour … ” fighting talk came from others.
For the first time, the Sars executive sat on a panel discussion at the indaba. That is, most of them. Absent was chief officer of legal counsel Refiloe Mokoena, who was recently issued with a notice of intention to suspend. Ignoring serious internal problems and possible conflicts of interest, the discussion centred on collecting the R1.345 trillion revenue target in the current revenue climate.
Sars is facing many problems, from a lack of skills to a ballooning debt book, and still has to introduce penalties for the non-filing of returns for companies.
Mogola Makola, appointed as chief officer of enforcement in 2017, is taking her title to the letter, threatening in no uncertain terms that “we know who you are and we will see you in jail”.
It will be good news indeed if she is referring to those known tax offenders whose tax investigations were set aside. Or is she referring to those compliant taxpayers who are requested to submit documentation again and again? And does she have such faith in the Sars “risk engine” that she is willing to stand by the tax risks it is spewing out, rather than checking on what the risk identifiers are?
- Ongoing dialogue between Sars and tax practitioners is essential. Rhetoric and defensiveness should be dispensed with.
- The risk engine has veered off track. It’s time for it to undergo a major overhaul. If its risk identifiers were made public, we would no doubt gape in astonishment. But it is not so amusing for low earning employees who are forced to take a couple of days leave to get to a call centre in order to prove why they do not have to be tax-registered.
- How can Sars improve its service offering and relationship with taxpayers? My suggestion is that Sars senior managers and executives should all spend at least one month a year working in a branch, and dealing with taxpayer queries face to face. Perhaps they will then not be so defensive.
- New Sars employees should spend a couple of months in the call centre to get acquainted with the business. Yes, this includes executives and senior management.
- There is a massive disconnect between how Sars perceives itself and how it is perceived by taxpayers. There is a gaping hole in Sars’s understanding of where it is flailing in a complex world of tax avoidance and tax evasion, and its ability to identify loopholes in the law that fuel arbitrage opportunities.
Kingon acknowledges the lapses of Sars and is “committed to changing the narrative”. With a view to building a more efficient and knowledgeable workforce, Sars has embarked on three staff development programs and a basic customs course.
Kingon understands that it is necessary to rebuild the trust between Sars and taxpayers. He also stressed that the revenue service needs to be fair when dealing with taxpayers. He requests support: “People, join hands with us, let’s stop this nonsense”. He is right – he cannot do this on his own. But Sars should take cognisance of its flaws and clean up its house.
Unfortunately it is easier to harass taxpayers within the system, while it takes specialist knowledge, commitment and guts to go after those who aren’t. Harassing compliant taxpayers due to risk engine bleepers or small businesses that get entangled in the maze of complex tax legislation and burdensome administrative procedures will not do much to bring in the R1.345 trillion. Can Sars step up to the mark?