Tito eases the pain a little
● Taxman sets sights on flashy ‘men of God’ ● Cosatu fumes over civil servants wage plans ● Oldies, war vets get R80 more
Relief as finance minister spares punch-drunk taxpayers further increases in personal and value added taxes
Finance minister Tito Mboweni wants the taxman to clamp down on controversial pastors suspected of tax evasion and other related crimes.
At a pre-budget speech press briefing yesterday‚ Mboweni said the government could no longer afford to sit back and watch controversial “men of the cloth” flaunt their wealth while they found creative ways of evading tax.
“Have you seen them? They feed people snake and grass and they walk on people‚ they do all kinds of crazy things in the name of God‚ hayikhona.
“And then you see them displaying wealth; the big cars‚ the doors that open both sides and all kinds of things – and they are not paying tax‚ these fellows. Some of them have private jets and so on, all in the name of God‚” said Mboweni‚ speaking to journalists before delivering his budget speech in parliament.
Mboweni said he had mandated tax experts within the National Treasury and the tax service Sars to tighten up the country’s laws governing the tax affairs of religious publicbenefit organisations or churches.
“They said they are already paying tax‚ I said‚ ‘where?’”
Mboweni said churches were mushrooming everywhere; the congregants were paying contributions but the church leaders did not pay taxes. He warned that this kind of lawlessness will bring the country down.
“I know I am going to get into trouble about this. The president will probably call me into his office and say‚ ‘what did you say about that thing’‚ and then I will tweet about it later‚” he joked.
Sars commissioner Edward Kieswetter said churches were classified as public-benefit organisations and were exempt from paying income tax.
But Kieswetter said most church organisations were not registering their employees for pay-as-you-earn‚ among other tax obligations they were not meeting‚ including the nonpayment of VAT.
“Where the abuse takes place is that when they employ anyone‚ those employees are subject to pay as you earn on their income. They are not exempt from that‚” he said.
“If they are not exempted by Sars‚ the organisations have to also pay VAT on goods and services that they get.
“The salary of the president of the public benefit organisations‚ or the pastor if it’s a religious organisation‚ has to run all of his income through the normal ‘in the services you rendered provision’ and cannot‚ for example‚ have a car as a benefit that doesn’t reflect as income‚ or a big house or a plane that doesn’t reflect as an income.
“To the extent that it is donated‚ it must have a donation’s tax certificate from the person who gives it‚ so you can’t get out of the tax loop.”
He said many of these organisations conflated the public benefits activity for which they are issued a certificate with other taxable activities.
“We have this year begun to raise quite a number of assessments through our audit work on such organisations and we will step up that work‚” he said.
A 2017 report by the Cultural‚ Religious and Linguistic Rights Commission found that many churches were neither registered with the department of social development nor Sars as public benefit organisations.
It also found that some of the churches did not submit annual reports to the social development department and did not disclose the amounts they made per year.
You see them displaying wealth, they’re not paying tax