Tax ombud pushes for fairer regime
A pressing priority for tax ombud Bernard Ngoepe is to gain complete independence from the SA Revenue Service (Sars). Judge Ngoepe’s term in office has been extended for three years and he wants his office established as an independent institution to gain the confidence of taxpayers and counter the drastic powers given to Sars.
Apressing priority for tax ombud Bernard Ngoepe is to gain complete independence from the SA Revenue Service (Sars).
Judge Ngoepe’s term in office has been extended for three years and he wants his office established as an independent institution to gain the confidence of taxpayers and counter the drastic powers given to Sars.
The ombud’s office appoints its own staff, but its budget is determined by the minister of finance and ring-fenced within Sars. The Sars commissioner is its accounting officer.
The office requires the approval of the minister if it wants to investigate systemic issues at the tax collector. “This is not a satisfactory state of affairs,” says Ngoepe.
If the ombud realises there is a problem in the manner in which Sars carries out its tasks, he says the ombud should have the right to investigate and make recommendations.
The Tax Administration Act established the office of the tax ombud in 2013 but it also introduced far-reaching powers for Sars. Ngoepe believes there are few other agencies in SA with powers as drastic as Sars.
He refers to the power to collect tax debt from someone who holds money on behalf of the taxpayer such as an employer, the bank or even a customer.
Sars can attach and sell a taxpayer’s assets, obtain a preservation order or liquidate or sequestrate an estate.
The pay now argue later principle is considered drastic.
The Davis tax committee expressed concerns about this power, saying the rule discourages taxpayers from engaging in appeal or review processes, because, psychologically, the taxpayer has already “lost” the money. “This rule creates a huge bias in favour of Sars,” the committee said its report.
Ngoepe says when there is such a powerful institution there must be another institution (in the form of the tax ombud) who will ensure those powers are not abused and are exercised in accordance with the law.
The Government Technical Advisory Centre, an agency of the Treasury, has investigated and recommended a new structure for the office of the tax ombud. Its report and recommendations have been with the ministry since June 2018.
“I am therefore disappointed that a process to strengthen this office, to establish it as an institution independent of Sars, is too slow,” says Ngoepe.
Surprisingly he does not want his recommendations to be binding on either Sars or taxpayers. He is in “no hurry” to have binding decisions.
“I do not want to find the office to be in the same position of the public protector ... this process is largely mediatory to find solutions in the dispute between Sars and the taxpayers. The power to issue binding decisions may complicate this process.”
Keith Engel, CEO of the SA Institute of Tax Professionals, would like to see the tax ombud and his office more involved in the legislative process. The voice of the taxpayer in this regard seems silent, he says.
“The rights of taxpayers need more guarding. Sars and the National Treasury remain the drafters of the legislation, but the office of the tax ombud must be consulted when changes are made or new legislation is proposed. Currently it does not appear as if the office has a voice in legislation.”
Ngoepe is “reasonably satisfied” with the mandate.
It is not part of the mandate to review legislation, but if there is a contribution his office can make it will do so, he says. “I see the role of the tax ombud as also helping Sars to collect as much tax as is possible.”
At the same time, it must be collected fairly.
“I believe that if taxpayers are treated fairly they will be tax compliant,” Ngoepe says.
He acknowledges that compliance has slipped and for it to return people must feel they are treated fairly, that their tax is used for the benefit of the people and is not stolen through corruption or to benefit politically connected individuals.
“Taxpayers must not get the impression that some people are dealt with more favourably by Sars because of their political connections,” he says.
Ettiene Retief, chair of the national tax and Sars stakeholders’ committees of the SA Institute of Professional Accountants, says a good tax system requires a balance of power.