Sars bares teeth by arresting smuggler
On the eve of last week's budget speech, the SA Revenue Service (Sars) swooped on self-confessed tobacco smuggler Adriano Mazzotti and seized luxury cars and other assets to pay for his tax debt, which is reportedly almost R34m.
It was a clear signal that Sars was back on the beat, tackling the damage done to its willingness and ability to chase politically connected tax dodgers during the tenure of former commissioner Tom Moyane.
Moves are under way to appoint a new permanent commissioner and rebuild Sars’ capacity.
The agency launched a new illicit-economy unit in August last year, which is looking at 58 cases. Its first priority is illicit tobacco, which a Treasury study found is costing at least R2bn-R3bn a year in lost tax revenue, but the new unit will also be looking at illicit fuel as well as clothing and textiles.
Though Moyane disbanded the old investigative unit – the so-called rogue unit – using it as a platform to launch hugely damaging attacks on Sars officials and Pravin Gordhan, most tax authorities globally have such units and the intention is that the governance and transparency of the new unit will be robust enough to prevent machinations such as Moyane's in future.
Under acting commissioner Mark Kingon, the tax authority has not waited to start urgent reforms to restore integrity
Also being re-established is the large business centre, which Moyane disbanded with dire consequences for Sars’ ability to optimise tax collections, particularly from large businesses and high-networth individuals.
The centre is expected to be set up by April 1, with specialists being recruited to staff it.
The government is considering a comprehensive response to the report of the recent Nugent commission into Sars, but under the leadership of Kingon, the tax authority has not waited to start on urgent reforms designed to restore its integrity and effectiveness.
This week's budget figures demonstrated how urgent the task is – and also how costly it is proving in the short term to undo the damage.
October's medium-term budget estimated a R27bn shortfall in revenue collections for the 2019-20 fiscal year, mainly because Sars has had to pay back the refunds that under Moyane were underestimated and not paid out to taxpayers in time, enabling him to say he was meeting revenue targets.
This week's budget added another R15.4bn to the revenue shortfall, bringing the total for the fiscal year to R43bn – almost as high as last year's dramatic undershoot.