Tax om­bud pushes for fairer regime

Business Day - - FRONT PAGE - Amanda Visser

A press­ing pri­or­ity for tax om­bud Bernard Ngoepe is to gain com­plete in­de­pen­dence from the SA Rev­enue Ser­vice (Sars). Judge Ngoepe’s term in of­fice has been ex­tended for three years and he wants his of­fice es­tab­lished as an independen­t in­sti­tu­tion to gain the con­fi­dence of tax­pay­ers and counter the drastic pow­ers given to Sars.

Apress­ing pri­or­ity for tax om­bud Bernard Ngoepe is to gain com­plete in­de­pen­dence from the SA Rev­enue Ser­vice (Sars).

Judge Ngoepe’s term in of­fice has been ex­tended for three years and he wants his of­fice es­tab­lished as an independen­t in­sti­tu­tion to gain the con­fi­dence of tax­pay­ers and counter the drastic pow­ers given to Sars.

The om­bud’s of­fice ap­points its own staff, but its bud­get is de­ter­mined by the min­is­ter of fi­nance and ring-fenced within Sars. The Sars com­mis­sioner is its ac­count­ing officer.

The of­fice re­quires the ap­proval of the min­is­ter if it wants to in­ves­ti­gate sys­temic is­sues at the tax col­lec­tor. “This is not a sat­is­fac­tory state of af­fairs,” says Ngoepe.

If the om­bud re­alises there is a prob­lem in the man­ner in which Sars car­ries out its tasks, he says the om­bud should have the right to in­ves­ti­gate and make rec­om­men­da­tions.

The Tax Ad­min­is­tra­tion Act es­tab­lished the of­fice of the tax om­bud in 2013 but it also in­tro­duced far-reach­ing pow­ers for Sars. Ngoepe be­lieves there are few other agen­cies in SA with pow­ers as drastic as Sars.

He refers to the power to col­lect tax debt from some­one who holds money on be­half of the tax­payer such as an em­ployer, the bank or even a cus­tomer.

Sars can at­tach and sell a tax­payer’s assets, ob­tain a preser­va­tion or­der or liq­ui­date or se­ques­trate an es­tate.

The pay now ar­gue later prin­ci­ple is con­sid­ered drastic.

The Davis tax com­mit­tee ex­pressed con­cerns about this power, say­ing the rule dis­cour­ages tax­pay­ers from en­gag­ing in ap­peal or re­view pro­cesses, be­cause, psy­cho­log­i­cally, the tax­payer has al­ready “lost” the money. “This rule cre­ates a huge bias in favour of Sars,” the com­mit­tee said its re­port.

Ngoepe says when there is such a pow­er­ful in­sti­tu­tion there must be an­other in­sti­tu­tion (in the form of the tax om­bud) who will en­sure those pow­ers are not abused and are ex­er­cised in ac­cor­dance with the law.

The Govern­ment Tech­ni­cal Ad­vi­sory Cen­tre, an agency of the Trea­sury, has in­ves­ti­gated and rec­om­mended a new struc­ture for the of­fice of the tax om­bud. Its re­port and rec­om­men­da­tions have been with the min­istry since June 2018.

“I am there­fore dis­ap­pointed that a process to strengthen this of­fice, to es­tab­lish it as an in­sti­tu­tion independen­t of Sars, is too slow,” says Ngoepe.

Sur­pris­ingly he does not want his rec­om­men­da­tions to be bind­ing on ei­ther Sars or tax­pay­ers. He is in “no hurry” to have bind­ing de­ci­sions.

“I do not want to find the of­fice to be in the same po­si­tion of the pub­lic pro­tec­tor ... this process is largely me­di­a­tory to find solutions in the dis­pute be­tween Sars and the tax­pay­ers. The power to is­sue bind­ing de­ci­sions may com­pli­cate this process.”

Keith En­gel, CEO of the SA In­sti­tute of Tax Pro­fes­sion­als, would like to see the tax om­bud and his of­fice more in­volved in the leg­isla­tive process. The voice of the tax­payer in this re­gard seems silent, he says.

“The rights of tax­pay­ers need more guard­ing. Sars and the Na­tional Trea­sury re­main the drafters of the leg­is­la­tion, but the of­fice of the tax om­bud must be con­sulted when changes are made or new leg­is­la­tion is pro­posed. Cur­rently it does not ap­pear as if the of­fice has a voice in leg­is­la­tion.”

Ngoepe is “rea­son­ably sat­is­fied” with the man­date.

It is not part of the man­date to re­view leg­is­la­tion, but if there is a con­tri­bu­tion his of­fice can make it will do so, he says. “I see the role of the tax om­bud as also help­ing Sars to col­lect as much tax as is pos­si­ble.”

At the same time, it must be col­lected fairly.

“I be­lieve that if tax­pay­ers are treated fairly they will be tax com­pli­ant,” Ngoepe says.

He ac­knowl­edges that com­pli­ance has slipped and for it to re­turn peo­ple must feel they are treated fairly, that their tax is used for the ben­e­fit of the peo­ple and is not stolen through cor­rup­tion or to ben­e­fit po­lit­i­cally con­nected in­di­vid­u­als.

“Tax­pay­ers must not get the im­pres­sion that some peo­ple are dealt with more favourably by Sars be­cause of their po­lit­i­cal con­nec­tions,” he says.

Et­tiene Retief, chair of the na­tional tax and Sars stake­hold­ers’ com­mit­tees of the SA In­sti­tute of Pro­fes­sional Ac­coun­tants, says a good tax sys­tem re­quires a bal­ance of power.

Bernard Ngoepe

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