Sars to restore public credibility

CRITICISM: EXODUS OF HIGHLY SKILLED STAFF Decline in tax compliance is of ‘deep concern’, says acting commissioner.

SA Revenue Service (Sars) hopes to restore its credibility and relationship with taxpayers. This comes in the wake of significant criticism following an exodus of highly skilled staff at the institution, a Tax Ombud report concluding that it was unduly delaying certain refunds and allegations that public finances suffered under the leadership of suspended former commissioner, Tom Moyane.

There has also been growing anxiety about a deterioration in taxpayer morality.

Speaking at the release of the preliminary revenue collection figures for the 2017-18 financial year, acting commissioner Mark Kingon said Sars would focus on restoring credibility and its relationship with the taxpayer.

These efforts included responding to skills turnover and strengthening its administration skills – particularly with regard to high net worth individuals and illicit financial flows as recommended by the Davis Tax Committee.

Other focus areas include small and large business segments and estates.

Kingon conceded that the administration of estates wasn’t optimal and said Sars would introduce a one-stop, end-to-end service to address frustration in this area.

Regarding concerns about diesel refund delays, he said significant risks were identified and Sars had to perform more audits.

Sars collected R1 216.6 billion in the 2017-18 financial year, roughly R700 million less than its revised target.

According to its head of research, Dr Randall Carolissen, the deficit was largely driven by under-collection related to VAT and dividends withholding tax, while fuel levies, corporate income tax and personal income tax also missed its projected targets.

Carolissen said prior to November tax revenues grew at a “rather pedestrian” rate of roughly 6%, but the three months through February saw relatively strong growth, and the aggregate growth figure for the year improved to about 7%.

However, revenue collection contracted in March, and as a result overall collection, grew by 6.3% in the past year. The contraction was primarily due to lower-than-expected dividend declarations and customs having to close earlier due to public holidays. While the 2017 budget anticipated that R28 billion would be collected as a result of tax policy measures, this didn’t materialise. Personal income tax, in particular, came under pressure.

“We see a general decline in compliance across all taxes but what is especially worrying are those taxes that are collected on behalf of Sars – the so-called agency taxes. This is Pay-As-You-Earn that is collected by employers on our behalf as well as VAT.”

Kingon said the decline in compliance was of “deep concern”. Some people were using employee taxes to enhance cash flow in their businesses.

Revenue collection grew by 6.3% in the past year.