Sars calls for compliance

Sars is concerned about the level of non-compliance regarding submission of tax returns. In the last five years the number of non-submission of returns for Pay-As-You-Earn has increased 77% and for VAT 32%.

Randall Carolissen of Sars said when economic growth lags, it’s usual to find a dip in compliance. “The valley has, however, never been as deep as we have seen in the last five years.”

In a session addressing the psychology of tax behavior during recession, Carolissen said Sars doesn’t want a situation where people resent others for getting away with murder while they try to remain compliant. Sars should have a “tough and honest engagement” with all taxpayers and shareholders to identify the areas where it fails to meet taxpayer expectations and Sars must deal with it.

Sars’ openness to engage with the people it serves is paramount, it’s a fiscal responsibility, he said.

There’s a lot of pressure on Sars to step up its game. It’s lost high-profile individuals and its technical skills base has been eroded.

Carolissen said Sars’ enforcement barometer depends on the compliance climate.

“We are noticing people are using payments from VAT and PAYE for their cash flows, and they think they are allowed to do so.” People have to pay their taxes, whether they like the taxman or not. “There are people who shift their morality as the economic environment changes,” he added.

There’s a close relationship between fiscal citizenship and democracy. If people are unhappy about their tax authority there are different ways to deal with it – like approaching the courts or the Office of the Tax Ombudsman.

If South Africans don’t honour the contract between themselves and government to pay their fair share of tax, there will be anarchy, Carolissen remarked.

Patricia Williams of Bowmans law firm said Sars must focus on legitimate power. “Given the high level of penalties in the Tax Administration Act, there is a real risk of an antagonistic tax environment developing that promotes non-compliance.”