Nene’s lofty goal
Against the backdrop of a reeling economy and a shrinking tax base, Finance Minister Nhlanhla Nene has set a target of collecting R1.3 trillion in taxes this year, a mark an analyst says is ‘unlikely’.
The tax man may have bitten off more than he can chew, with a revenue target of R1.3 trillion this tax season, according to an analyst.
Briefing media yesterday, Finance Minister Nhlanhla Nene and acting South African Revenue Service (Sars) commissioner Mark Kingon announced several upgrades to the revenue collector’s efiling system and renewed efforts to tackle defaulters and illicit trades, such as the illegal tobacco industry, in a bid to restore confidence in the embattled institution and rake up enough money to reach the country’s economic growth targets.
While Nene said he was confident in Sars’ initiative to return the institution to its former glory in the eyes of South Africans, economist Dawie Roodt suggested that the ship may have already sailed.
“I really do believe people out there are fed up with Sars and fed up with the mismanagement, the corruption and misallocation. A tax revolt is very difficult to start, but it is even more difficult to put to an end. We are currently witnessing an example of that with e-tolls. That is a very successful example of a tax revolt.”
According to Roodt, the institution had obstacles to overcome to meet the “unlikely” revenue target of more than a trillion rands.
“First of all, with this target there are a couple of potential headwinds. The first is to do with the economy and the shrinking tax base. We are looking at a really distressed economy. The other is to do with the lack of skills now at Sars, the institution. They have lost a lot of skilled people. The third one has to do with compliance and the question of whether people are scared or suspicious of giving their money to Sars.”
Touching briefly on the Sars commission of inquiry, set up to look into the management of the institution during the tenure of suspended commissioner Tom Moyane, Nene said this was one of the efforts government was embarking upon to restore the country’s trust in the entity. He added that such efforts were critical to boosting the economy.
“I would want us to desist in getting in too deep into what is coming out of the commission until the commissioner has completed its work. I think we need to give these processes time to play out because if we make our statements, it’s as if we are participating in the commission without being there.
“But coming to confidence, whether it is coming out in the commission or not, it’s an area where we should focus our attention. It is looking into how best to regain the confidence of South Africa... the initiatives that [Kingon] spoke about and the team here is embarking on, [are] precisely intended for that. We need to rebuild the relationship between the institution and South Africans.”
Kingon said various divisions were working closely together at Sars to identify the most notorious evaders, but admitted their target was an ambitious one.
“[R1.345 trillion] is giving me sleepless nights ... Yes it’s expected of me and I know there is a lot of effort that will have to go in. People have spoken about confidence in the tax system. Obviously that impacts, as I have indicated before in April, we sat with 14 000 VAT vendors who chose simply not to pay over a billion rands. Now that type of behaviour has a significant impact on us being able to achieve the [R1.345 trillion].” – simnikiweh@citizen.co.za
A tax revolt is very difficult to start, but it is even more difficult to put to an end. We are currently witnessing an example of that with e-tolls. That is a very successful example of a tax revolt. Dawie Roodt Economist