There’s no quick fix for hobbled Sars

The new head of South Africa’s tax agency says rebuilding the organisation will be a long haul after management was “dismantled” and it lost public trust.

“In the five months I’ve been there we’ve done a significant amount of work, but it’s not a onetrick pony, it’s a multi-dimensional, multifaceted piece of work,” South African Revenue Service (Sars) commissioner Edward Kieswetter said in an interview at Bloomberg’s Johannesburg office last week.

Kieswetter, who took over as head on May 1, inherited an institution that had suffered “massive failure of governance and integrity” after the appointment of former head Tom Moyane in 2014, a probing commission had found.

Sars had a climate “characterised by fear and intimidation, with compliant managers that felt they were under a command-and-control structure”, and unwittingly or unconsciously carried out work that didn’t serve the organisation, the new head said.

Turning around the tax agency is crucial to lift South Africa out of an economic slump. The state institution was one of the more effective during the 2000s, when efficient collection and strong growth led to revenue surpluses and space for the government to offer tax cuts.

Treasury started reversing those concessions in 2015 as the economic expansion waned and skilled professionals left the organisation, hindering its ability to improve collections.

Revenue fell R57.4 billion short of the budget estimate in the year that ended March 31, the agency said in April.

“How do I rebuild the trust and improve the morale? My answer is one person at a time. You have to connect with each of the 12 500 people and demonstrate to that individual that you truly care,” Kieswetter said. “Trust isn’t built by making big promises, it’s by doing many small things.”

Kieswetter said he’s met with labour unions and about 90% of the institution’s staff to share his plans for the future.

He also started a revenue recovery project and is implementing the recommendations of the inquiry into Sars management.

It has recovered money paid to Bain & Co, the Boston-based consultancy company that was hired to assist in restructuring Sars in 2015, and is in discussions with Gartner after the US technology-research firm secured a contract without proper procurement processes being followed, Kieswetter said. – Bloomberg