CityPress - - Business - DEWALD VAN RENS­BURG dewald.vrens­burg@city­press.co.za

The SA Rev­enue Ser­vice (Sars) seems to have mis­un­der­stood the na­ture of the Davis Tax Com­mit­tee when it dra­mat­i­cally an­nounced that it wanted Judge Den­nis Davis to re­cuse him­self just over a week ago.

It also ap­pears that Sars has backed down from its ini­tial threat against Davis, which seems to have had no le­gal ba­sis.

Davis this week told City Press that Sars was mis­taken if it thought the tax com­mit­tee was legally ac­count­able to them, as op­posed to Fi­nance Min­is­ter Pravin Gordhan.

“In its state­ment, Sars says that we, as a tax com­mit­tee, were ap­pointed un­der sec­tion 11 of the Sars Act,” said Davis.

This sec­tion al­lows for so-called spe­cial­ist com­mit­tees that are meant to ad­vise the Sars com­mis­sioner – who is cur­rently Tom Moy­ane – on the tax au­thor­ity’s op­er­a­tional is­sues.

Sars’ whole ar­gu­ment is that Davis is, in this sense, “em­ployed” by Sars to ad­vise Moy­ane.

As such, Sars is within its rights to ask for his re­moval if the re­la­tion­ship be­came un­work­able, Sars’ ex­ec­u­tive of em­ployee re­la­tions, Luther Le­belo, ar­gued last week.

That is not what the Davis Tax Com­mit­tee does at all, said Davis.

“It is clear from our terms of ref­er­ence, pub­lished on the com­mit­tee’s web­site, that the min­is­ter ap­pointed us to ad­vise him on tax pol­icy [not ad­min­is­tra­tion].

“In short, sec­tion 11 [of the Sars Act] does not ap­ply to us – the com­mit­tee has no ac­count­abil­ity to the com­mis­sioner and is only ac­count­able to the min­is­ter,” said Davis.

In a lengthy state­ment is­sued last Fri­day morn­ing, Sars at­tacked Davis for al­legedly con­spir­ing with oth­ers to un­der­mine Sars’ lead­er­ship and try­ing to in­sti­gate a tax re­volt, among other things.

The only le­gal ar­gu­ment in Sars’ state­ment was that Davis had al­legedly vi­o­lated the Sars Act.

This sim­ply had no ap­pli­ca­tion to his com­mit­tee, said Davis.

In its ini­tial state­ment, Sars said that it would write to Gordhan to de­mand that Davis ei­ther re­cuse him­self or get dis­missed from the tax com­mit­tee.

Sars also said it was seek­ing le­gal ad­vice on whether it could lay a com­plaint against Davis at the Ju­di­cial Ser­vice Com­mis­sion.

Sars could not con­firm whether it had done ei­ther of these things this week.

“Sars has ven­ti­lated its views on the is­sue in our me­dia state­ment [last week]. We do not be­lieve that the steps Sars in­di­cated it would take, as out­lined in its state­ment, re­quire fur­ther men­tion in the pub­lic do­main,” said Sars spokesper­son Sandile Memela.

Trea­sury told City Press this week that it was “not yet in pos­ses­sion of such a let­ter”, when asked if Sars had fol­lowed through on its stated in­ten­tions the pre­vi­ous week.

Sars’ pub­lic at­tack on Davis fol­lows a slight amend­ment to the tax com­mit­tee’s terms of ref­er­ence, which now means it will look at a few op­er­a­tional is­sues at Sars, in ad­di­tion to the tax pol­icy work it has been do­ing for three years. In the mid­dle of last year, Gordhan amended the Davis Tax Com­mit­tee’s terms of ref­er­ence to in­clude four is­sues re­lated to Sars. These are mostly un­con­tentious and re­lated to gaug­ing how Sars would im­ple­ment the com­mit­tee’s pol­icy rec­om­men­da­tions. The com­mit­tee is meant to look at how Sars is deal­ing with tax­ing rich in­di­vid­u­als, how Sars is deal­ing with base ero­sion and profit shift­ing, and how Sars bat­tles so-called il­licit fi­nan­cial flows. The com­mit­tee was, how­ever, also asked to “ad­vise on an ap­pro­pri­ate gov­er­nance and ac­count­abil­ity model for Sars”, ac­cord­ing to Gordhan’s bud­get speech last month. This might in­clude mak­ing rec­om­men­da­tions about the in­de­pen­dence of the Sars com­mis­sioner – the job be­came a pres­i­den­tial ap­point­ment around 2002. In the same speech, Gordhan said that Trea­sury “will con­tinue to call on Judge Davis and the tax com­mit­tee for ad­vice on how best to en­sure that Sars re­mains a ro­bust and ef­fec­tive tax col­lec­tion agency”.

Ac­cord­ing to Davis, there has been a lot of un­war­ranted spec­u­la­tion in the me­dia about what the tax com­mis­sion is meant to do when it comes to Sars.

“It is cor­rect that last year the min­is­ter asked us to look at cer­tain is­sues of tax ad­min­is­tra­tion for the first time,” said Davis.

“The com­mit­tee was asked to eval­u­ate whether the op­er­at­ing model pro­posed for Sars by the Katz Com­mis­sion more than 20 years ago was still rel­e­vant.”

Davis had been a mem­ber of the Katz Com­mis­sion, which was the pre­vi­ous ma­jor at­tempt at re­view­ing the South African tax sys­tem. “This re­sulted in meet­ings with Sars [last year],” said Davis.

“On these is­sues it would be help­ful to en­gage with Sars, but on all other is­sues of tax pol­icy with which we will be busy un­til the end of the year, our main en­gage­ment is with Trea­sury,” said Davis, sug­gest­ing that Sars’ an­i­mos­ity is not fa­tal to the com­mit­tee’s work.

One pil­lar of Sars’ at­tack has been that Davis “was sup­ported at said con­fer­ence” by for­mer deputy com­mis­sioner of Sars Ivan Pil­lay and for­mer Sars ad­viser Yolisa Pikie.

Both spoke at the same event as Davis and were quoted in the City Press ar­ti­cle along­side the judge.

“Sars ap­pears to hold as a ma­jor griev­ance that, at the rel­e­vant meet­ing, Pil­lay and oth­ers who had left Sars were present,” said Davis.

“I speak at many meet­ings on tax pol­icy and I do not ask for guest lists, nor is it a pre­con­di­tion for me [to know] who is present,” said Davis.

“I re­ally don’t know what the oth­ers said at the meet­ing, but in a democ­racy, peo­ple with whom Sars dis­agrees are en­ti­tled to speak,” Davis told City Press.

“After all, Sars is also sub­ject to the con­sti­tu­tional prin­ci­ple of ac­count­abil­ity.”

Tom Moy­ane

Pravin Gordhan

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.