Tom’s tax coup
TESTIMONY: HE SHUT DOWN SARS UNIT SO ‘FRAUD’ WOULDN’T BE SEEN
Suspended SA Revenue Service boss Tom Moyane “broke” the Large Business Centre, responsible for 30% of total revenue collected by Sars annually, it emerged yesterday during the inquiry into administration and governance at the organisation between 2014 and 2018.
Cited Moyane negotiating settlement for taxpayer of considerably less than owed.
The former head of the SA Revenue Service (Sars) Large Business Centre (LBC) believes fraud, and a desire to have access to the money her unit handled, was why suspended tax boss Tom Moyane “broke” her unit.
Moyane’s assertion that the current R48 billion shortfall in tax revenue was attributable to a downturn in the economy seemed less plausible after yesterday’s testimony by former Sars group executive Sunita Manik at the Nugent Commission of Inquiry into tax administration and governance at Sars between 2014 and 2018.
As head of the LBC, Manik’s department was responsible for 30% of total tax revenue collected by Sars annually. The LBC offered an end to end service with a “personal taxpayer relationship manager” who handled a single business’s tax profile.
She said the growth of the LBC led to a notable increase in revenue income, while decreasing its own spend. Moyane effectively shut the department down.
The restructuring under Moyane came about as a result of the “rogue unit” narrative as Sars was in a crisis, Manik was told.
Manik said that during the restructuring, managers were appointed who did not have the requisite technical skills. “In my opinion, the LBC was broken,” she added.
“Breaking” the LBC could have given officials direct access to high-worth individuals, which would allow them to personally negotiate tax settlements, outside of the highly regulated LBC.
Part of the restructuring also meant that each refund was queried, which in her view became cash flow management and manipulation.
To Sars, refunds represent a significant outflow of cash, Malik said, with more than R130 billion per annum being paid out during her time at Sars, and more than R70 billion coming from the LBC.
“As long as I’m querying it, I don’t have to pay interest to those taxpayers. So that cash doesn’t go back to the taxpayer where it belongs to drive the heart of the economy,” she testified.
Former Sars chief operating officer, Barry Hore, also submitted evidence in support of this and showed that Sars was intentionally sitting on refunds to try and boost revenue figures and hide a slide in tax administration.
Comparing Sars to a “big bank”, Manik accused Moyane of settling disputes without the LBC’s involvement.
She recalled a taxpayer who was upset when the settlement committee rejected the settlement Moyane negotiated with the taxpayer, due to the amount being significantly less than what he actually owed Sars.
“I also think it’s fraud. Why come to the LBC unless you’re interested in money? LBC’s concentration is money,” Manik said in response to a question as to why she thought the LBC had been dismantled.
“An assessment can be in excess of a billion rands. If I settle it and I get 10%, I’m getting a significant amount of money.
“If I set up a taxpayer, a refund threshold below a million rand, it’s easy every month to get a million rand refund and nobody would see it.”
Manik was not able to quantify the losses as a result of the disruption of the LBC, but would do so if given access to certain figures.
However, tax analyst Deborah Tickle said it was difficult to attribute Sars’ losses to one particular happenstance and conclusions should not be made from only a few testimonies.
“It’s important to gather all the information and determine the overall reasons for the problems at Sars, because there is clearly a problem. It’s dangerous at this stage and I think the overall outcome is going to be very interesting,” Tickle cautioned.
“The points that have been made have merit, but it’s too soon to say there’s any one reason for a R48 billion drop in tax revenue.
“It’s clear Moyane attempted to attribute the loss to an economic downturn, and obviously a portion of it would have been that.
“However, other commentators I have read, I’m not one of them, but I think there is merit in their assertion that the rest was due to inefficiency at Sars along with possible reduced compliance due to taxpayer fatigue/morality due to lack of trust in Sars and government.” –