Sars appeals to the Treasury for more funds

The SA Revenue Service (Sars) is underfunded and has asked finance minister Tito Mboweni for an increased allocation over the next three years, commissioner Edward Kieswetter said on Wednesday.

The bulk of the money is needed for investment in technology, systems and in building the revenue service’s capability.

Sars received R9.45bn from the government in 2019 but Kieswetter stressed in an interview that more funds were needed for investment and to fill 968 vacancies — of which 600 are “critical”. The vacancies had created significant capacity challenges in various areas.

Money was also needed to recalibrate the modernisation process at Sars, he said.

Kieswetter said Sars had underachieved in employment equity targets largely because of the difficulty in replacing people who had left. The freezing of vacancies from July 2018 also played a role. Sars achieved 76.03% for employment equity against a target of 78.3%.

He told MPs at least 53 employees were on suspension, with seven of them having been on suspension for more than two years. “Most of these matters are being finalised and where appropriate the suspensions are being uplifted pending the finalisation of the disciplinary processes,” he said.

Of the five individuals about whom recommendations were made by the Nugent commission of inquiry into tax administration and governance at Sars, three had already left by agreement while the other two were still being dealt with.

The application for more funds comes at a time when government is facing severe fiscal constraints with Treasury having already indicated to government departments that they will have to slash their budgets.

Kieswetter pointed out in a briefing to parliament’s finance committee on the Sars annual report for 2018/2019 that there was a need for more investment to build the tax agency. The organisation had suffered a severe decline in effectiveness when former commissioner Tom Moyane was at the helm.

Kieswetter said the extent of the damage at Sars was “incalculable and deep”. He said the damage was much more than what had been reported by the Nugent inquiry. The commission found that there had been a “significant failure of integrity and governance at Sars” under Moyane. It pointed to a deliberate dismantling of key governance elements, the systematic hollowing out of critical personnel and the breakdown of important relationships.

More funds for Sars would mean that its cost-to-revenue ratio would increase over the next few years to about 1%.

In the 2018/2019 financial year the tax authority achieved a cost-to-revenue ratio of 0.84% against a target of 0.92%. But Kieswetter said this was only due to significantly reduced budget allocations. It was a reflection of the financial constraints under which Sars had to operate in the past year.