We can thank Gigaba for probe at SARS
Love him or hate him, there is one thing Malusi Gigaba got right during his shortlived stint as finance minister: the promise of a judicial commission of inquiry into the meltdown at the South African Revenue Service.
That’s notwithstanding his woeful overall performance in the portfolio. He was an inappropriate choice as guardian of the fiscus — his record on state-owned entities left much to be desired — but even Gigaba deserves his due.
He announced the inquiry during the latter part of 2017, when SARS was steeped in administrative chaos. The state of flux largely contributed to rising tax dissent and emboldened criminal elements intent on cheating the system. This trip down memory lane was sparked by acting commissioner Mark Kingon’s admission in Parliament last week that a skills flight has undermined SARS’s capabilities in combating illicit financial outflows. So not only did SARS have to contend with the tax revolt, but financial crookery thrived because the receiver’s brains trust had been gutted. The latter exacerbated SARS’s collections headache.
The shenanigans at SARS coincided with the ANC’s existential crisis in the build-up to its Nasrec elective congress in December. In that period, Trevor Manuel, the former long-serving finance minister and minister in the Presidency, delivered the Eric Molobi memorial lecture at the University of Johannesburg on November 9, almost a month before the Nasrec event.
Manuel predicted during an impassioned lecture that the congress would collapse. Fortunately, this was not to be. But his insights about SARS and state-owned entities, expressed when I interviewed him after the lecture, still ring true and warrant a revisit.
This is so because of the impending SARS inquiry and the renewed promises to clean up state-owned entities, most of whose balance sheets are not worth the paper they are written on.
First, though, a disclaimer. Manuel was clear in the interview that it wasn’t possible “to transpose the circumstances that applied when I was finance minister on the present”. During his time, however, state-owned entities financed themselves off their own balance sheets and did not erode the fiscal balance. That seems almost an anomaly, given parastatals’ current over-reliance on government guarantees and cash injections.
To Manuel, board tender committees made no sense. These committees lay at the heart of the governance crises at state-owned entities and were partly responsible for destroying their operating model. “You can look at the Eskom inquiry and understand that. That has eaten into the expenditure side.”
His diagnosis of the revenue side was that issues there were symptomatic of the (in) competence of the revenue administration.
DEMOCRACY
“But it’s also about how people feel about the quality of democracy. My sense of it is the judicial commission that minister Gigaba called for … is likely to confirm both those aspects,” Manuel said.
It was not simply a matter of SA’s tax rates being too steep, he said, although “they are high for the service we get”.
The bigger issue was that there had been a vote of no confidence in the quality of democracy in SA. Worryingly, he noted during the interview that much of the competence that had been built over time at SARS — “not parachuted in” — had left.
One of the strengths of the SARS he knew was that competent professionals wanted to join it, even if the view was that five to seven years with the institution would “look good on my CV for me to be part of this dynamic team”.
Manuel said he didn’t imagine there were too many people queuing up to join SARS now, and it was important for the judicial commission to establish why.