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TAX OM­BUD WANTS FAIR DEAL FOR ALL

The Star Early Edition - - FRONT PAGE - GE­ORGINA CROUTH is a con­sumer watch­dog with se­ri­ous bite. Write to her at con­sumer@inl.co.za

TAX sea­son has opened and there’s al­ways un­hap­pi­ness with tax re­turns.

To mit­i­gate the dis­con­tent, the Of­fice of the Tax Om­buds­man (OTO) was set up to help, by act­ing as a me­di­a­tor be­tween the re­luc­tant tax­payer and the rev­enue au­thor­ity.

Es­tab­lished in 2013, the OTO was at first ham­strung by its de­pen­dence on Sars. It could not ap­point its own staff, it re­lied on the rev­enue ser­vice for fund­ing, its om­buds­man was only ap­pointed for a brief, three-year term, and it could not launch in­ves­ti­ga­tions. In Jan­uary, that changed.

The om­bud’s term has been ex­tended to five years (renewable); it’s able to ap­point its own staff, launch in­ves­ti­ga­tions, and de­mand rea­sons for not fol­low­ing its rec­om­men­da­tions within 30 days from ei­ther Sars or the tax­payer.

Those rea­sons are noted in the OTO’s re­port to the Fi­nance Min­istry. Still, it can­not make bind­ing rul­ings – the om­bud is only able to make rec­om­men­da­tions. This doesn’t nec­es­sar­ily ren­der the of­fice tooth­less though, be­cause Sars gen­er­ally toes the line be­cause it ac­counts to Par­lia­ment.

Em­bold­ened

Hav­ing more power has given them courage to take on chal­lenges. The CEO of the of­fice, ad­vo­cate Eric Mkhawane, said: “More pow­ers ob­vi­ously mean we can take on sys­temic re­views where there are no com­plaints: now we can ini­ti­ate in­ves­ti­ga­tions. Pre­vi­ously, we were lim­ited to act­ing on com­plaints. Now we can look at un­der­ly­ing is­sues.

“We pro­duce an an­nual re­port where we in­di­cate se­ri­ous is­sues. We hope that the Stand­ing Com­mit­tee on Fi­nance will force Sars to ac­count. The Tax Ad­min­is­tra­tion Act is very clear: where they don’t agree with our rec­om­men­da­tions, they must pro­vide rea­sons.”

Vat re­funds

In March – barely two months af­ter the OTO was granted more power – Tax Om­buds­man Judge Bernard Ngoepe wrote to then-fi­nance min­is­ter Pravin Gord­han, ask­ing for per­mis­sion to launch a probe into whether “sys­temic prob­lems” at Sars are to blame for wide­spread de­lays in the pay­ment of re­funds. The of­fice had re­ceived in ex­cess of 500 com­plaints about VAT re­funds, the judge ex­plained. Per­mis­sion was granted and the pro­vi­sional re­port has been handed to Sars for com­ment.

“We ex­pect them (Sars) to re­spond be­fore the end of the month, af­ter which we’ll pro­duce a fi­nal re­port. We want the pub­lic to know what we’ve done about it be­cause tax­pay­ers de­serve to know what’s hap­pen­ing with their money,” the judge said.

Con­cern

Of great con­cern are re­ports about wasted tax­payer money. Pay­ing tax, we’re told, is the right thing to do (if you don’t want Sars on your case) – much like pay­ing your tele­vi­sion li­cence.

But, with re­ports of tax­payer-funded wed­dings and wasted gov­ern­ment ex­pen­di­ture, en­cour­ag­ing com­pli­ance is a hard­ship.

Mkhawane said: “We try to stay away from po­lit­i­cal is­sues – it’s out­side our man­date. But we want a good tax ad­min­is­tra­tion and any­thing that un­der­mines that is prob­lem­atic.

“I’m not a politi­cian, al­though I care deeply about the way in which our taxes are be­ing spent. It’s pub­lic money – it shouldn’t be mis­spent by pri­vate in­di­vid­u­als. It’s not just one fam­ily: we’re hear­ing far too many re­ports about tax­payer money be­ing wasted and the poor­est are suf­fer­ing the most. I come from the ru­ral ar­eas and I know how peo­ple are suf­fer­ing.

“It’s a de­plorable sit­u­a­tion,” Mkhawane said. En­sur­ing fair­ness The OTO pro­vides tax­pay­ers with a fair, sim­ple and free way to seek res­o­lu­tion for a ser­vice, pro­ce­dure or ad­min­is­tra­tive dis­pute with Sars – but its ju­ris­dic­tion is lim­ited and tax­pay­ers must first ex­haust the rev­enue’s in­ter­nal pro­cesses. Just un­der 40% of com­plaints re­ceived were re­jected in the pre­vi­ous fi­nan­cial year – be­cause Sars’ in­ter­nal pro­cesses weren’t fol­lowed.

Mkhawane said they can’t change the law.

“We can’t re­view tax pol­icy or leg­is­la­tion that’s con­tained in the (Tax Ad­min­is­tra­tion) Act. So, if peo­ple have spe­cific prob­lems with the act, they need to go to court. If there’s an ob­jec­tion or ap­peal, we only deal with the ad­min­is­tra­tive as­pects of that.

“If there’s any­thing that re­lates to Sars pol­icy, we can re­view, whether it’s ser­vice, pro­ce­dural or ad­min­is­tra­tive as­pects, so long as it falls within our man­date.”

Ex­haust­ing Sars pro­ce­dures is not nec­es­sar­ily the only op­tion avail­able to tax­pay­ers, said Mkhawane.

“If there are com­pelling cir­cum­stances, they can ap­proach us di­rectly. If they’re fac­ing

Far too many re­ports about tax­pay­ers’ money be­ing wasted

se­vere hard­ships – it’s threat­en­ing your busi­ness and you may go un­der if you wait for Sars, then you’re within your rights to ap­proach us di­rectly. Also the act gives us dis­cre­tion – where a wait is not rea­son­able.

“We re­cently helped a busi­ness­man who was wait­ing for a VAT re­fund for an in­or­di­nate amount of time. His busi­ness was un­der threat be­cause its cash-flow was se­verely im­paired – if he didn’t get his re­fund ur­gently, he would have had to close his doors. There was a gen­uine de­lay so we in­ter­vened.”

PIC­TURE JEF­FREY ABRA­HAMS

LAST MINUTE: There is still a steady stream of peo­ple at the Sars of­fices in Long Street, Cape Town, even though the dead­line for man­ual sub­mis­sions has al­ready passed.

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