Inquiry into tax collection

Finance Minister Malusi Gigaba, pictured, announced yesterday that President Jacob Zuma has agreed to establish an urgent commission of inquiry into tax revenue collection and governance at the SA Revenue Service (Sars).

Gigaba said he has informed Sars commissioner Tom Moyane expressed his support and willingness to cooperate.

“We expect this inquiry to be constructive and to strengthen the institution further where possible,” said Gigaba yesterday.

“It is critical for government to determine the cause of the tax revenue under-collection to enable government to take urgent remedial steps to ensure Sars is able to meet its revenue targets as set out in the medium-term budget policy statement (MTBPS) and budget.”

The MTBPS he presented in parliament last month showed Sars is budgeting for an under-collection of R50 billion in tax revenue. Any further revenue under-collection would pose risks and weaken tax administration, he said.

“The inquiry will help to assess what factors are responsible for the under-collection of revenue by Sars and what steps need to be taken to improve performance management systems to improve its capacity to collect revenue.

“The MTBPS recognised that while the economic cycle is the most likely and significant factor driving lower revenue collection, other factors could also be at play, like weakening tax morality and challenges facing tax administration.

“Whatever the reason for such shortfall, the risk of under-collection impacts directly on the size of the future budget deficits and, hence, on the sustainability of the projected debt-to-GDP trend and directly on our credit rating and growth prospects.” – ANA