No golden handshake just yet for Sars commissioner

Edward Kieswetter, commissioner of the South African Revenue Service (Sars), will remain in his position for a while longer. His term of office was supposed to end on 30 April.

The Presidency said in a statement his tenure had been extended to enable an orderly transition in the organisation. It is unclear how long he will remain at the helm.

Kieswetter was appointed in 2019 after President Cyril Ramaphosa fired his predecessor, Tom Moyane, who was a close ally of former president Jacob Zuma – the president who allegedly allowed his state to be captured by political and economic opportunists.

Restoring trust

Kieswetter has made enormous inroads in restoring operational efficiency and trust in the tax agency. He played a critical role in ending the reign of terror under Moyane.

In 2022, Kieswetter publicly apologised to several former Sars employees whose lives, livelihoods and reputations were destroyed during the organisation’s years of capture. He expressed his deep regret for the hurt, pain and suffering visited upon the former employees because of the witch-hunt by Zuma’s keepers from 2014 to 2018.

Last June, Kieswetter announced the appointment of three deputy commissioners to strengthen his executive team. Their appointment followed recommendations made in the final report of the Nugent Commission of Inquiry into Tax Administration and Governance.

Johnstone Makhubu, Carl Scholtz and Bridgitte Backman have a wealth of experience in business operations, information technology and turnaround strategies.

Makhubu has been with Sars since 2016, while Scholtz has been involved in business turnarounds at Comair, SA Breweries, Pick n Pay and the Johannesburg Stock Exchange.

Backman has been described as a seasoned business leader with extensive expertise across a range of industries, such as development finance, energy and food and beverages.

Tax collections

Since its inception, Sars has collected close to R20 trillion for the country’s social and economic development. The revenue target for the 2023-24 tax year was revised downward by almost R57 billion to R1.73 trillion last October.

This lower estimate is largely due to struggling companies and consumers, resulting in lower collections from company profits and value-added tax (VAT).

Tax revenue from companies is expected to bring in R300 billion, almost 36% less than budgeted for in February last year.

VAT is expected to generate

R446 billion, close to 26% lower than anticipated a year ago.

Finance Minister Enoch Godongwana will deliver his budget next Wednesday. He has already indicated that government must raise an additional R15 billion in the 2024 budget.

Tax commentators have cautioned against increasing personal income tax rates, noting it is not “viable in the current economic climate”.

A substantial cost-cutting exercise is critical to averting further deterioration in the fiscal situation.

But, says George Tshesane, government and public services leader at Deloitte, this may not be feasible in an election year and is a route government has historically avoided.